With the story developing on a daily basis, Allied Domecq the UK drinks group has increased its offer for the Australian winemaker Peter Lehmann Wines, following the increased offer by rival bidder Hess Group yesterday.

Allied Domecq, through its wholly owned subsidiary Allied Domecq Wines Australia Pty Ltd, announced today that it proposes to increase its base offer price for Peter Lehmann Wines Limited (PLW) to A$4.00 per share. The offer remains conditional on Allied Domecq acquiring relevant interests in at least 51% of PLW's issued share capital.

Allied's first offer was A$3.85 (which Hess matched yesterday) or A$4.00 a share if Allied received over 90% acceptances. However, given the opposition of founder Peter Lehamnn, who holds 10.5% of PLW, to the Allied bid it seems unlikely Allied will ever achieve 90%.

However, Allied said today that "shareholders will receive $4.00 per PLW share, regardless of whether Bidder acquires 90% or more of the PLW Shares and therefore regardless of whether Mr Peter Lehmann accepts the offer (or sells to another person who accepts)."

In addition, PLW shareholders will be entitled to retain the fully franked final PLW dividend of 5.5 cents per share if they were the registered holder of PLW shares on the record date of 23 September 2003.

Allied Domecq also announced that it had received Foreign Investment Review Board clearance for its offer.

Allied Domecq Chief Executive Philip Bowman said: "Allied Domecq's new offer represents a clear statement of our belief in the quality of the Peter Lehmann wines, and our determination to grow PLW's brand presence both in the Australian market and internationally. We remain committed to maintaining the principles of quality and local autonomy and identity, which have built the Peter Lehmann Wines brands into the successes that they are today.

"Our new offer gives all PLW shareholders the opportunity to realise full value for all their shares. We are convinced that it is far more desirable for PLW shareholders to achieve an attractive price for all of their shares - a price that recognises and values the successes of the company - than to accept partially the Hess offer and be locked in as minority holders in a company controlled by a privately-owned group."

Meanwhile Hess said today that it is reconsidering its PLW. And Hess Chairman Max Lienhard didn't rule out increasing his A$3.85 bid to match Allied's renewed offer.