Allied Domecq Deal Is OKd
Allied Domecq shareholders voted Monday to accept a $13-billion takeover proposal from French rival Pernod Ricard, paving the way for one of the world’s biggest deals in the spirits sector.
Meeting in London, shareholders of Allied Domecq, the distributor of Beefeater gin and Stolichnaya vodka, voted 99.83% in favor of the plan that would launch the takeover. Their approval follows a vote by Pernod Ricard shareholders last week that gave the go-ahead to a plan to issue $2.4 billion in new shares to help finance the deal.
Allied Domecq Chairman Gerry Robinson told shareholders that recent difficulties in many markets highlighted the need for such consolidation.
“In these increasingly challenging market conditions, your board considers that the need for further consolidation in the distilled spirits industry has become increasingly apparent,” he said.
The merged company would be the world’s second-largest liquor business, and analysts expect it to pose a more serious challenge to No. 1 Diageo, whose brands include Guinness stout and Johnnie Walker scotch.
“I am delighted with the decision by Allied Domecq shareholders and the confidence demonstrated in our project,” said Patrick Ricard, chairman and chief executive of Paris-based Pernod Ricard.
Besides the new shares, Pernod said, the takeover would be paid for in cash: $5.6 billion from Pernod and $5 billion from U.S.-based Fortune Brands Inc., which would acquire some Allied brands from Pernod once the deal closed.
The plan has been approved by European Union and U.S. regulators. Allied said it expected the deal -- the liquor industry’s biggest transaction since Diageo was created by a 1997 merger -- to become effective July 26.
To appease regulators and help with finances, Pernod plans to sell some of the brands it acquires from Allied to Fortune Brands, a liquor, sports equipment and household products company, for about $5.1 billion. Those brands include Canadian Club whiskey, Courvoisier cognac, Maker’s Mark bourbon, Sauza tequila and some California wine brands.
“This acquisition will make us a new global leader in premium spirits and wine and create new growth opportunities in a high-return industry,” Fortune Chairman and CEO Norm Wesley said in a statement Monday.
The Federal Trade Commission and the Justice Department are still considering competition issues surrounding the transfer of the Canadian Club and Maker’s Mark brands, but Pernod and Fortune said last week that that review would not hold up the transaction. The U.S. regulators approved Fortune’s purchase of 20 other wine and spirits brands from Pernod.
