Allied froths on Pernod bid talk

THE LONG-awaited consolidation of the drinks industry could be under way, with Allied Domecq poised to play a pivotal role.

Shares in Ballantine's whisky maker Allied touched 457p, their best in nearly two years, on speculation that French rival Pernod Ricard, which makes Chivas Regal, is poised to bid. Allied closed 6p better at 452 3/4p. Neither firm would comment.

A Pernod director stirred speculation last month, saying it would have no trouble funding an acquisition. Pernod has successfully integrated the gin and vodka lines it bought from Seagrams and worked off the debt.

The Pernod family seems ready to dilute its stake should the right acquisition come along. Observers say Allied is more likely predator than prey. Allied may have its eye on Bacardi, whose rum is one of the world's best selling spirits.

Earlier this week, Bacardi authorised the issue of new shares. That could lead to the sale of a stake of the Bermuda company, or even an initial public offering. Bacardi is currently owned by some 600 members of the founding family.

An IPO is prohibited until the beginning of next year, but a rival could take a stake as soon as two-thirds of the board authorises the issue of the new shares.

Analysts believe Bacardi would fit well in the Allied stable. For Allied 'there is a better product fit' with Bacardi than with Pernod, said Nigel Popham, drinks analyst at Teather & Greenwood.

Allied chief executive Philip Bowman can afford to wait for the right acqusition. 'Bowman is looking to deal from a position of strength,' said Popham.

ALLIED DOMECQ brands:
Beefeater gin
Teachers whisky
Courvoisier cognac
Makers Mark bourbon
Kahlua
Tia Maria
Mumms champagne
Perrier Jouet champagne

BACARDI brands:
Dewars whisky
Bombay Sapphire gin
Martini vermouth
Bacardi Breezers (alcopops)