Wednesday, April 20, 2005

"Take a fresh look at Allied-Domecq"

Allied Domecq's website says "Take a fresh look at Allied-Domecq" and that's just what a couple of companies are doing. A-D is a conglomerate that own many prominent spirits brands (Beefeater, Malibu, Kahlua, Maker's Mark, Suaza, Stoli), wine brands (Clos du Bois, Gary Farrell, Callaway Coastal, Champagne Mumm, Bodegas & Bebidas) and food companies (Dunkin' Donuts, Baskin Robbins ice cream and Togo's sandwiches). They are currently being pursued by Pernod Ricard, the world's third largest spirits company who owns Wild Turkey, Chivas Regal, Bushmills, Jameson and a lone wind brand, Jacob's Creek from Australia. Oddly, P-R has partnered with Fortune Brands who owns numerous golf brands, home and hardware companies, spirit companies (DeKuyper, Vox, Knob Creek, El Tesoro) and just a couple of wine companies (Geyser Peak/Canyon Road and Wild Horse) .

How the two suitors will split up A-D is anyone's guess right now. Since P-R has only one wine brand, my guess is that they will go after the wine portfolio to give Jacob's Creek some leverage in the US market. Further, since Fortune's wine interests are 90% in Sonoma County, its unlikely that the Sonoma-heavy A-D portfolio will interest them (Clos du Bois, Buena Vista, and Gary Farrell are all Sonoma County brands). Fortune may, however, have interest in some of A-D's non-US brands like Montana in New Zealand, Cockburn's Port, and some of the Spanish wines.

It is expected that A-D will accept a friendly offer of $14 billion tomorrow. The fallout in the wine sector will be interesting to watch....


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