Allied Domecq holders OK deal
Dunkin' parent's pact with rival Pernod may take effect this month
LONDON -- Allied Domecq PLC shareholders voted yesterday to accept a $13 billion takeover proposal from French rival Pernod Ricard SA, 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 99.8 percent in favor of the plan that will 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.
Pernod is also financing the acquisition partly by selling Allied Domecq's restaurant business, which consists of Dunkin' Donuts, Baskin-Robbins, and the Togo sandwich chain.
Allied Domecq chairman Gerry Robinson told shareholders that recent difficulties in many markets highlighted the need for consolidation.
The merged company will be the world's second-largest liquor business and analysts expect it to pose a more serious challenge to number one 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 US consumer products firm Fortune Brands Inc., which is acquiring some Allied brands from Pernod once the deal closes.
The plan has been approved by EU and US regulators. Allied said it expects the deal, the liquor industry's biggest transaction since Diageo PLC was created by a 1997 merger, to become effective July 26.
To appease regulators and help with finances, Pernod plans to sell some brands it acquires from Allied to Fortune Brands, a liquor, sports equipment, and household products firm, for about $5.1 billion. Those brands include Canadian Club whisky, Courvoisier cognac, Maker's Mark bourbon, and some California wines.
''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 Brands chairman and chief executive Norm Wesley said in a statement yesterday.
The US Federal Trade Commission and Department of Justice 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 review will not hold up the transaction. The US regulators approved Fortune's purchase of 20 other wine and spirits brands from Pernod.
The deal was almost thrown off course by a consortium led by Constellation Brands Inc., the world's biggest winemaker, and including liquor maker Brown-Forman Corp. and buyout firms Blackstone Group LP and Lion Capital. The group pulled out of the race last month, saying the economics did not justify an offer.
