Shares in Allied Domecq rose to their highest in 20 months today as rumours of a potential takeover surfaced.

The announcement from Bacardi yesterday that it is one step closer to an initial public offering, led to talk amongst dealers that companies such as Pernod Ricard may react by seeking an acquisition such as AD.

Rumours that Pernod may have AD as a target have surfaced several times in the past. Neither company were immediately available for comment.

Allied's share price this morning rose by 2% to 454 pence. Earlier the shares hit 457p, their highest level since June 2002.