LONDON -- British drinks company Allied Domecq PLC has agreed in principle to a $14.2 billion takeover offer from French and U.S. rivals, a person familiar with the deal told the Associated Press yesterday.
Allied Domecq's board has accepted the broad outline of the offer, but some details remain to be settled before the agreement can be finalized and announced, the person said, speaking on condition of anonymity. That could happen as soon as today, the person said.
The Wall Street Journal reported earlier on its website that [image-nocss] Allied Domecq had accepted an offer that would see its brandsincluding Ballantine's whiskey and Beefeater gindivided between Pernod and Fortune. French beverage group Pernod has brands including Martell cognac and Jacob's Creek wine. Fortune, a U.S.-based liquor, sports equipment and household products company, distributes Jim Beam whiskey and Absolut vodka.
Pernod spokesperson Florence Taron confirmed that the company had made a friendly bid for Allied Domecq and said details would be released early Thursday. Allied Domecq declined to comment on the report. Fortune Brands spokesperson C. Clarkson Hine said: "As a matter of company policy, we don't comment on rumor or speculation."
The Journal reported that Pernod would get about two-thirds of Bristol, England-based Allied's spirits brands by value, bringing it into closer competition with Diageo PLC, the world's top drinks company.
About 80% of the bid would be in cash, with the rest in Pernod Ricard shares, the newspaper said. Citing unidentified sources familiar with the deal, it said Fortune would provide nearly half the cash and would acquire more of the brands that have high profiles in the United States.
Investors have long expected consolidation among second-tier drinks companies like Allied and Pernod, whose combined sales amount to two-thirds of those of Diageo, the British-based leader with brands such as Smirnoff vodka, Guinness stout and Johnnie Walker scotch.
Analysts say a bid from Pernod would put the combined company on a stronger footing to compete with Diageo. A Pernod-Allied deal would also fill gaps in both companies' drinks portfolios.
Pernod Ricard said earlier this year that it earned 487 million euros ($652 million) in 2004 on sales of 3.57 billion euros ($4.8 billion). Allied Domecq, whose businesses also include Baskin-Robbins and Dunkin' Donuts, had 2004 sales of about $5.8 billion.
Diageo, meanwhile, said in February that it earned 869 million pounds ($1.64 billion) in the first half of the fiscal year on sales of 4.98 billion pounds ($9.44 billion). The company had sales of about $16 billion (12.3 billion euros) in its previous full fiscal year.
Besides producing and distributing spirits brands, Fortune Brands has interests in golf equipment such as Titleist, Cobra and FootJoy and the Moen faucets, Master Lock and Therma-Tru doors businesses.