Pernod, Fortune Brands in Talks to Buy Allied Domecq
France’s Pernod Ricard and U.S. conglomerate Fortune Brands Inc. said Tuesday that they were in joint talks to buy larger rival Allied Domecq in a deal that would reshape the global liquor business and create two stronger rivals to industry leader Diageo.
The discussions, if fruitful, would initially bring together brands from Chivas Regal scotch to Beefeater gin in a deal that some analysts said could reach $13.5 billion. Pernod and Fortune would ultimately divvy up Allied’s biggest brands.
Although known as a liquor company, Britain-based Allied owns prominent California food brands Togos and Baskin-Robbins and wineries in Sonoma County and Napa Valley such as Clos du Bois.
Lincolnshire, Ill.-based Fortune also is a player in California wine, producing Geyser Peak and Canyon Road wines in Sonoma County and the Wild Horse winery in Templeton.
All three companies stressed that the talks were at an early stage. The talks are structured to have Pernod lead the transaction and transfer some assets to Fortune Brands when the deal is completed, a source said.
The deal would help Fortune achieve its goal of beefing up its presence in Europe. For Pernod, it would help the world’s third-largest liquor group and owner of Chivas Regal close the gap on market leader Diageo.
Pernod almost bid for Allied in 1999 and the two companies’ portfolios are complementary, with the biggest overlap in Spain.
Pernod joined forces with Diageo to carve up the Seagrams drinks portfolio in 2001 and analysts have been looking for its next move since it lost out on the chance to buy Scottish whiskey maker Glenmorangie to LVMH last year.
People familiar with the situation said Pernod would look to break up Allied, filling in gaps in its own portfolio by taking Allied’s major vodka brand, Stolichnaya, and avoiding overlaps that might concern competition regulators.
