Constellation makes approach for Allied Domecq

28 April, 2005

Constellation Brands of the US has formally indicated that its is considering gatecrashing Pernod Ricard's £7.5bn takeover of Allied Domecq.

Allied has confirmed that it has received an approach from a consortium led by Constellation, owner of Stowells of Chelsea wine and Blackthorn cider.

Constellation is leading a consortium which may table a counterbid, and said in a statement that it is "at an early stage of evaluating its options with a number of potential partners".

The consortium including Brown-Forman, America's fifth largest spirits producer and owner of the Jack Daniels brand, as well as private investment firms Blackstone and Lion Capital.

Both Allied and Constellation said that it is too early to determine whether a formal approach will be made, but the suggestion of a new deal may encourage Allied shareholders' tpo hold of accepting the Pernod Ricard offer too quickly.

The prospect of an all-cash offer from Constellation may prove more tempting to investors than a cash and paper alternative.

Diageo, the world's number one sprits producer, would be barred from getting too closely involves with a takeover of Allied on competition grounds. However, Diageo might be able to pick off individual brands from a buyer and is known to believe that Allied's Makers Mark bourbon would be a good fit with its existing business.