French spirits group Pernod Ricard made a £7.4 billion (€10.8 billion) bid for UK rival Allied Domecq today in a deal to close the gap on market leader Diageo.
"After Seagram, this is a new step in our development to cover the world better and to have important brands in almost all spirits categories," Pernod chairman Patrick Ricard said, referring to its 2001 purchase of the Canadian firm that vaulted Pernod to number three in the global spirits rankings.
The long-awaited offer, to be financed with a big loan and new Pernod shares, values each Allied share at 670 pence, a 4 per cent premium over Allied's closing share price yesterday, and values the firm at £7.4 billion.
News of the deal coincided with Allied's interim results. The maker of Chivas regal scotch, Martell cognac and Jacob's Creek wines said it was offering 545 pence in cash and 0.0158 of a new Pernod share for every share in Allied, home to brands such as Ballantine's whisky and Beefeater gin.
About 80 per cent of the offer would be in cash, Pernod said, and the deal is likely to close in the next three to four months.
Pernod teamed up with US firm Fortune Brands, and the two are dividing up Allied's biggest labels to allay anti-trust concerns.
Pernod said Fortune would take on brands including Courvoisier cognac, Sauza tequila and Canadian Club, paying about £2.8 billion in cash, and Fortune is also buying Pernod's Larios gin.
Pernod will retain the majority of Allied's businesses, such as Beefeater gin, Malibu coconut-flavoured rum, Stolichnaya vodka and Ballantine's whisky and liqueurs such as Kahlua and Tia Maria.