Pernod seen considering bid for Allied Domecq

PARIS -- Pernod Ricard SA is examining a tie-up with rival drinks maker Allied Domecq PLC as one of several possible acquisitions, a person close to the company said yesterday.

The French liquor group, whose brands include Martell cognac, Jacob's Creek wine, and Chivas Regal whisky, has consulted Morgan Stanley and J.P. Morgan bankers about the feasibility of a deal with Allied, the maker of Beefeater gin and Canadian Club whisky, the person close to the Paris-based group said, speaking on condition of anonymity.

''There have been discussions about several ideas, including Allied Domecq, but they are at a very early stage," said the person, who is familiar with the talks.

Pernod declined to comment on whether it was considering such a bid, but insisted any offer for Britain's Allied or another competitor would be friendly.

Pernod and Allied have not yet formally discussed a tie-up with each other, the person close to the company said, who spoke after Allied shares rose and Pernod dipped on rumors that a deal was imminent.

Besides its liquor business Allied Domecq also owns fast-food chains, including Randolph, Mass.-based Dunkin' Donuts and Baskin-Robbins ice-cream shops.

Investors have long expected consolidation among second-tier drinks firms like Allied and Pernod, whose combined sales amount to two-thirds of those of Diageo PLC -- the British-based world leader, with brands such as Smirnoff vodka, Guinness stout and Johnnie Walker scotch.

Representatives for Allied Domecq, Morgan Stanley and J.P. Morgan declined to comment on the possibility of a Pernod-Allied deal.

Pernod spokeswoman Florence Taron also refused to comment, instead referring to remarks by chairman and chief executive Patrick Ricard, who said Thursday that the group was considering acquisitions.

''We're watching the sector very closely," Taron said. ''Anything that's for sale we will look at."

But she appeared to rule out a hostile bid for Allied or any other rival. ''Under no circumstances would there be a hostile acquisition," Taron said.

Analysts said a deal between Pernod and Allied would be a good fit, filling numerous gaps in their product ranges. Pernod, for example, currently has no champagnes, while Allied has two -- Perrier Jouet and Mumm.

''On paper the deal's rather positive," said Valerie Gadon of KBC Securities.

''It would increase their presence, notably in the United States and South America, and could enable the new group to really challenge Diageo."