Shares in French drinks group Pernod Ricard and British rival Allied-Domecq rose yesterday on a renewed round of merger speculation.
Both firms declined to comment. Analysts said Allied was probably still for sale, but doubted whether the smaller and preoccupied Pernod was in a merging mood.
France's Competition Council is set to meet today to review the long-delayed $755-million sale of Pernod's Orangina soft drink business to America's Coca-Cola Co. A final Finance Ministry ruling is expected by the end of October.
Shares in Allied - maker of Beefeater gin, Ballantine's and Maker's Mark whiskeys and Sauza tequila - rose 11 per cent in London to 361p each.
Pernod Ricard - maker of the aniseed tipples from which it takes its name, as well as Wild Turkey, Jameson and Clan Campbell whiskeys - rose five per cent in Paris to €66.25. The two have been rumoured often as potential partners, with talk intensifying this summer as Allied finally extricated itself from a complex divestment of its pubs business.
Allied has been seen as intent on a major spirits deal since being overshadowed by the 1997 megamerger that formed spirits sector giant Diageo, also based in Britain.
At present, Allied shares are near a 52-week high set earlier this month, and near the top of spirits group stock multiple valuations globally. Canada's Seagram leads the price/earnings range in the mid-20s, versus Allied's roughly 18 to 19 ratio. Seagram talks with Allied broke down last year.
US-based Brown-Forman and Bermuda-based Bacardi have been bandied about as potential matches for Allied, which also operates the Dunkin Donuts and Baskin-Robbins ice cream store chains principally in the United States. Market talk and a British newspaper report put Pernod in a bid for Allied at about 400p per Allied share.
Consolidation in the $92-billion worldwide spirits industry has been ongoing for years, but has been slowed by the fact that most industry leaders are controlled by families unwilling to surrender control of their businesses.
