Drinks combine Allied Domecq is to consider terms for buying the minority 49.6 per cent interest in the Cantrell & Cochrane business after it is put up for sale by Guinness.

Guinness is disposing of the holding to meet EU and Irish Government conditions for its merger with Grand Metropolitan.

"As the majority owner of Cantrell & Cochrane, of course we will be interested in buying the minority interest but it all depends on the price," said an Allied Domecq spokesman.

C&C's accountant, KPMG, is completing a detailed valuation of the Irish company and this will form the initial basis for valuing Guinness's minority stake.

It is expected to be completed next week and Allied Domecq will then have 28 days to decide whether to exercise its first option to buy the Guinness 49.6 per cent stake at the KPMG valuation. If it declines to do so within that period, Guinness can seek alternative buyers for its stake, which KPMG is likely to value at more than £300 million. Industry sources believe that the most likely outcome is for Allied Domecq to take 100 per cent control of C&C, but that a stock market flotation of the Irish drinks group is then likely within one to two years as Allied Domecq demerges its non-spirits interests.

The British group's attitude to the C&C sell-off was outlined in comment on interim figures disclosing a £3 million increase in first half profits to £320 million despite a £35 million "hit" from strong sterling.

Both the spirits and retailing sides of the business achieved real growth on a comparable basis after adjusting for the effects of currency translation and additional pension charges due to changes in the Advance Corporation Tax regime.

Allied Domecq chairman, Sir Christopher Hogg, indicated that directors were still examining opportunities to join forces with other players in the global spirits industry in response to the new challenges presented by the Guinness/Grand Met merger.

But the search for new arrangements which genuinely add value for shareholders is a "complex challenge", he said.

Sir Christopher predicted that "consolidation will continue in the drinks industry". "The industry has been reviewing its strategy. Allied Domecq intends to be a part of the consolidation process, but we're prepared to go it on our own if necessary," he added.

"We're not going to do a deal just for the sake of it. . . it must add value," he continued. "Our half-time figures show an improving trend," he continued.