The UK-based Allied Domecq saw its stock fall almost 5% today on further speculation that the company would make a bid for the troubled Australian winemaker Southcorp.

By 1030 GMT, shares in Allied, the world's second-largest spirits maker, were down 13 1/2 pence at 279 1/2p.

Although a number of analysts believe Southcorp would be a good strategic fit to Allied, there is still fear that Allied may overpay for such an asset, particularly in the current difficult trading conditions for wine companies.

The speculation is a result of Southcorp's falling value, after A$700m (US$420 million) was wiped from its market value after the comany revealed a 97% slump in first half profit today.