INTERNATIONAL. The Board of Pernod Ricard today announced that it is to acquire Allied Domecq in a friendly takeover.
The transaction will be made through wholly-owned subsidiary Goal Acquisitions Limited. The terms of the offer value each Allied Domecq share at 670 pence (based on a price of €116 for each Pernod Ricard Share) and the existing issued share capital of Allied Domecq at approximately £7.4 billion. Approximately 80% of the consideration is in the form of cash.
The offer represents a premium of approximately +36.2% to the closing price of 492 pence for each Allied Domecq share on 3 February 2005 (the last business day prior to the speculation surrounding a potential offer for the company); and +24.8% to the closing price of 537 pence for each share on 4 April (the last business day prior to the announcement by Allied Domecq that it was in preliminary discussions with Pernod Ricard regarding a possible offer).
Conditional on the agreement, Pernod Ricard has agreed to sell certain Allied Domecq assets including the core brands Sauza, Maker’s Mark, Courvoisier and Canadian Club spirits brands, super-premium California wines, including the Clos du Bois brand, Allied Domecq distribution assets in the UK, Germany and Spain and for US wine, and Pernod Ricard’s Larios brand to Jim Beam owner Fortune Brands for approximately £2.8 billion in cash.
Pernod Ricard will retain the majority of the Allied Domecq business, including many of the core spirits brands such as Ballantine’s, Beefeater, Kahlúa, Malibu, Stolichnaya and Tia Maria, and premium wines such as Montana, Mumm (and Mumm Cuvée Napa), Perrier Jouët and Campo Viejo. The Ballantine’s acquisition gives the company a powerful hand in the Scotch whisky category, as it will fit in well with existing blend Chivas Regal.
Pernod Ricard will also acquire several leading national brands, including Imperial in South Korea, Wiser’s in Canada and Presidente in Mexico.
Pernod Ricard said it believes that the offer for Allied Domecq has “clear and compelling strategic and financial rationale for Pernod Ricard, with clear benefits for shareholders of the enlarged group”.
It will become the second largest spirits & wines company worldwide (behind Diageo).
The board of Allied Domecq, which has been so advised by Goldman Sachs International, believes the terms of the offer to be “fair and reasonable”. Accordingly the board “unanimously recommends” the offer.
Pernod Ricard Chairman and Chief Executive Officer Patrick Ricard said: “I would like to say how excited we are by this transaction, which is a new major strategic step in Pernod Ricard’s development. I believe that Allied Domecq’s magnificent portfolio of brands has a great future within our Group. We at Pernod Ricard look forward to working with the employees of Allied Domecq to realise the strong potential that exists to grow our enlarged business.”
Fortune Brands Chairman and Chief Executive Officer Norm Wesley said: “We see the purchase of these exceptional, complementary brands as an excellent high-return growth opportunity that will fill gaps in our portfolio and take our very profitable spirits and wine business to the next level. These brands and distribution assets will significantly enhance our spirits and wine business by elevating our entire portfolio, supporting growth of our existing brands, expanding our scale in key markets and creating valuable distribution efficiencies.”
