Proposed takeover of Highland Distillers would create giant drinks company

Consolidation continues to hit the drinks industry with plans to create a powerful new group out of the proposed takeover of Highland Distillers.

The deal, worth more than £700m, will also take the listed company private - away from the ups and downs of the Stock Exchange.

The bid would create a major Scottish drinks group to fight the multinationals, such as Diageo and Allied Domecq.

Highland, producer of The Famous Grouse, The Macallan and Highland Park whiskies, has agreed to back the joint takeover bid.

It involves William Grant, the producer of Glenfiddich and The Balvenie, and whisky group Edrington, a charitable trust that already has a 27.9 per cent stake in Highland.

Highland is seen to have suffered from the short-termism of the Stock Exchange, which has prevented it from developing long-term strategies.

Grant's managing director Glenn Gordon said: "Grant's and Edrington have each been in the Scotch whisky business for over a century and we understand the sustained investment which is required to build Scotch whisky brands."

The deal would see the departure of finance director Jamie Wilson and chairman Brian Ivory, who led Highland through success and growth.

Ivory said: "I believe the price offered delivers excellent value to Highland's shareholders."

Highland has already expanded into spirits and wine through its sales and marketing division. As well as its own brands, it handles Cointreau, Rémy Martin cognac, Mount Gay rum and Heidsieck champagnes.

Last month it boosted its international clout by launching a new joint venture with Rémy Cointreau and Jim Beam Brands Worldwide.

The joint venture, to be named Maxxium in the UK from January, is to boost marketing spend for the wines and spirits.

However, Grant's has no plans to develop its own brands through joining the venture, although this has not been ruled out for the future.

The takeover deal has already been backed by Highland shareholders representing over 50 per cent of the stock, including Edrington's stake

Under the deal, Edrington will own 70 per cent of Highland, with its chairman Ian Good heading the takeover.

Good said: "Edrington and Highland have been successful partners for over 100 years and the proposed transaction is good for the Scotch whisky industry and good for Scotland."

Edrington, dating back to 1860, is involved in every part of Scotch whisky production, including distilling, blending and bottling.