Brewer Bids $2.6 Billion for Britain’s Allied-Lyons

An Australian lager maker Monday mounted Britain’s biggest takeover bid with a $2.6- billion cash offer for Allied-Lyons, the British food and drink giant.

The bid from Elders IXL, an Australian group with wide brewing, agricultural and trading interests that is best known for its Foster’s lager, was immediately dismissed as “ludicrously inadequate” by Allied Chairman Sir Derrick Holden-Brown.

Allied said in a statement that its directors and financial advisers had unanimously agreed that the bid should be rejected.

The scale of the bid makes it likely that the government will refer it to Britain’s Monopolies Commission to determine whether a takeover of Allied is in the public interest.

Elders offered $3.65 a share in cash. Allied shares, which had risen to $3.93, dropped to $3.80 on the London Stock Exchange.

Allied, one of Britain’s 20 biggest companies, has over 40 brands of beer including a rival Australian lager, Castlemaine XXXX, and 7,000 bars, as well as a wines and spirits business and a huge food division.

Elders, earlier reported to have lined up buyers for all except the brewing division, said Monday that it had decided to pursue its bid alone, without the backing of a consortium.

“We have decided to proceed alone since we see no added value from a consortium,” John Elliott, Elders’ chief executive, said, adding that it planned to sell off the food division if the bid was successful.

The offer easily exceeds Britain’s previous largest takeover, $1.4 billion paid by the tobacco group BAT for Eagle Star insurance in 1983.

Market analysts said that the Elders bid appeared to be exploratory and that it remained to be seen whether the firm could afford to raise it at a later stage.

The bid was backed with finance from a group of banks, but investors were disappointed that Elders, whose market capital is only about a quarter of that of Allied, had failed to attract one or more financially powerful partners to a consortium.