'Positive' Allied set for new expansion

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Related tags: Pernod ricard

Drinks giant Allied Domecq is poised for acquisitions and launching new products as it faces renewed speculation about a takeover or merger.Expansion...

Drinks giant Allied Domecq is poised for acquisitions and launching new products as it faces renewed speculation about a takeover or merger.

Expansion is set to be funded out of a new £1bn bank facility and savings made from the sell-off of its 3,500 pubs and off licences to Punch Group.

It is focusing marketing spend in the UK on-trade on giving a further kick to Tia Maria liqueur, particularly in young persons' venues.

Chief executive Philip Bowman said it was interested in expanding its portfolio, particularly white rum and vodka.

"If Stolichnaya vodka becomes available on a worldwide basis, it would be of interest at the right price," he said.

It follows Allied's acquisition of the world's biggest-selling spirit, Korea's Jinro soju.

Bowman said the group was enjoying "positive trends" since the demerger in September.

He said the £2.7bn deal had already led to "significant savings" and would provide "further cost reduction opportunities" in the future.

It is boosting marketing spend globally on its key brands, Ballantine's whisky, Beefeater gin, Kahlua liqueur and Sauza tequila, which increased volumes by eight per cent.

The City continues to be flooded with rumours about French drinks giant Pernod Ricard planning a takeover bid.

With some funds already in place, the Paris-based group is selling its Orangina soft drinks business to Coca-Cola for £461m.

Neither side would comment last week on the prospect of a takeover although Pernod Ricard, which owns Campbell Distillers in the UK, is set to announce its strategy on Wednesday (November 3).

Allied chairman Sir Christopher Hogg said: "We have had no direct approach from Pernod Ricard and, if there was, Pernod Ricard would be the first to announce it."

Canadian group Seagram, which held abortive merger talks with Allied last year, may also re-enter the bidding.

Bowman said: "We're actively seeking opportunities to enhance our position as the number two global spirits and wine company."

He said it was "pursuing options to exit" its 25 per cent shareholding in Britannia Soft Drinks, which controls 90 per cent of Britvic.

Bass, which owns 50 per cent of Britannia, is said to be interested in buying Allied's stake along with the other 25 per cent owned by Whitbread.

Allied's turnover increased over the 12 months to August 31 by two per cent to £2.4bn although pre-tax profits fell by seven per cent to £579m.

Sales for the spirits and wine business increased by two per cent while trading profits were static at £369m.

Related topics: Beer, Spirits & Cocktails

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