SHARES in Allied Domecq surged 17p to 463p on stock market speculation that the drinks-to-pubs group may become the target of a £5 billion takeover bid following this week's £24 billion sterling merger of the Guinness and Grand Metropolitan groups.
Drinks analysts believe the GrandMet/Guinness get-together could be the catalyst for further consolidation in the global drinks industry based on leading international brands. Allied Domecq chief executive executive, Mr Tony Hales, added impetus to the market train of thought by saying he did not rule out following the merger lead.
Flat interim figures from Allied Domecq indicate its exposure to a potential takeover hid unless the group can take a pre-emptive strike by engineering an agreed merger with another drinks combine. First-half pre-tax profits were 1 per cent lower at £317 million, turnover from continuing businesses slightly increased to £2.36 billion.
The decline in interim profits was partly due to sterling's revaluation, lowering profits by around £14 million. If sterling maintains its present levels, the full year currency hit will be about £28 million.
Improved results were achieved by some "core" spirit brands in their major markets and leading pub brands continued to grow. But margins remained under pressure. The interim dividend is unchanged at 9.44p per share on earnings up 1 per cent at 19.4p a share.
