Conflicting reports circulated this weekend over whether Bacardi International is looking to form a counter-bid for Allied Domecq. Other reports claim that Pernod Ricard and Fortune Brands have started due diligence ahead of a bid for the drinks group, while one newspaper carried an interview with the head of Allied.
In the Observer yesterday (10 April), reports suggested that Bacardi is looking for allies with a view to making a counter-offer. The company is sounding out a number of rival spirits companies, including Brown Forman, Constellation Brands, Suntory and venture capitalists, for a possible GBP7bn bid, the paper said.
Citing sources close to Allied, the Mail on Sunday yesterday said that the structure of any bid would be complex, leaving a deal vulnerable to an assault from a further predator. Analysts predict that Brown Forman and Bacardi could try to frustrate a Pernod-Allied tie-up, the paper said.
In Saturday’s Financial Times, however, while some analysts conceded that a rival bid is a possibility, the paper said that Bacardi is “thought to be opposed to bidding either independently or as part of a consortium” for Allied.
“Bacardi is understood to be content to watch the current events at Allied unfold from the sidelines,” the paper said. No sources were either named or quoted in the story.
AFX reported yesterday, meanwhile, that Pernod has started due diligence on Allied, although the focus at the moment is on ‘risk assessment’ and on issues such as distribution contracts and the group’s GBP370m pensions deficit. “It is understood that while Pernod has not yet got access to any commercially sensitive information, it will have enough data to formulate a bid,” the press agency said.
In an interview with the Sunday Telegraph yesterday, Allied chief executive Philip Bowman said: “Can I just make something quite clear? We have not received a firm proposal; the board has not met to consider any proposal.”
When asked how likely he felt a bid would be, Bowman replied: “Well, as I’m also chairman of a gaming group (Coral betting shops) answering would be a conflict of interest.
“Why don’t you go to your local Coral branch and see what odds they’ll give you?”