Cantrell & Cochrane is expected to be valued at over £600 million by an independent valuation of the company by accountants KPMG that is nearing completion. That will value Guinness's 49.6 per cent stake at over £300 million and will be the starting point for negotiations between 50.4 per cent shareholder Allied Domecq and Guinness.

Guinness has until the end of the year to sell its stake in C&C as part of the European Commission approval for the Diageo merger with Grand Metropolitan, and Allied Domecq is seen as the most logical purchaser.

But there are divided opinions among London analysts on the likelihood of a bid for the minority stake in C&C with some analysts stating that such a bid might not go down well with the London market.

"Allied Domecq is portraying itself as an international drinks group focused on global brands like Teachers and Beefeater, so it's hard to see how buying out Guinness from C&C fits into that strategy," said one London analyst.

He added that C&C might be very profitable but that it is difficult to see how a company with interests stretching from soft drinks to cider to mineral water, whiskey and cream liqueur, fits into a company like Allied Domecq focused on a small number of internationally-recognised spirits brands.

Allied Domecq - by making an early pitch to buy the Dewars scotch whisky and Bombay gin brands from Guinness - made it clear that global brands remain its priority. Allied Domecq may have withdrawn from that bidding which eventually went as high as £1.1 billion sterling when Bacardi bought the brands, but its strategy was made clear.

A link-up with another spirits group is now seen as likely in the London market and Natwest Securities has already said that Allied Domecq has had ample time to review its options and negotiate with a potential partner. Buying the Guinness C&C stake for upwards of £300 million would not put any undue pressure in Allied Domecq, which was prepared to pay over £600 million for the Dewars and Bombay brands. But by pulling out of the bidding when it went to an unacceptable level, Allied Domecq has also made it clear that it does not intend to pay over the odds and will not overpay for the remaining 49.6 per cent of C&C.

Guinness, needless to say, will be looking for the highest possible price for its C&C stake, but will be aware that if it turns down Allied Domecq's final offer there will be no prospect of finding a single trade buyer. "Nobody in the trade will buy their stake if they don't do a deal with Allied Domecq. Who would want to be a minority shareholder in a situation like that?" said one industry source.

Some market sources in London believe that, given the institutional pressure to emphasise its global brands strategy, Allied Domecq could conceivably reduce or sell its own stake in C&C as part of a sale to institutional investors and a subsequent flotation on the stock market. C&C would be a hugely attractive investment for Irish institutions, who are flush with cash and constantly bemoaning the lack of quality equity investments on the Irish market.

A flotation with Allied Domecq remaining a controlling shareholder is a less likely option, as the Stock Exchange might require the British group to go to a minority position, as well as provide for an independent chairman and a strong board of non-executive directors.

Institutional investors would probably not be happy to invest in a publicly-quoted C&C with Allied Domecq as a majority shareholder without strict assurance on key items such as dividend policy.

Since Irish Distillers was taken over by Pernod Ricard ten years ago, the Irish stock market does not have a drinks company on its list - a notable omission. Fund managers have already told The Irish Times that there would be a rush to support a C&C flotation, as long as it was not overpriced. "A modest discount to the sector would ensure a strong take-up," said one fund manager, who still expressed doubt about the prospects of a flotation.

"Allied Domecq has an awful lot of pro's and con's to weigh up on C&C - the price, the reaction from institutions and the London market but, on balance, buying out Guinness seems the most likely option. I'd love to be proved wrong on that but I don't think I will be," said one fund manager.