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Joint $14.5 Billion Bid For Allied Domecq Would Split Up Wineries

Pernod Ricard would get Mumm and Perrier-Jouët, while Fortune Brands would get Clos du Bois and other California wineries

Jacob Gaffney
Posted: April 21, 2005

Some of the world's best-known wineries will be changing hands if spirits firms Pernod Ricard and Fortune Brands complete their joint $14.5 billion bid to buy U.K.-based Allied Domecq, one of the largest alcohol-beverage companies in the world. The publicly traded firm's board has agreed to the offer, whose details were announced today.

The bidding partners are primarily interested in the big-name spirits brands, the acquisition of which makes Pernod Ricard the second-largest drinks firm in the world after Diageo. But over the past five years, Allied Domecq has acquired numerous wine brands, making it a major player in that market as well.

Under the largely cash deal, French firm Pernod Ricard would take control of most of Allied Domecq's businesses, including most of the wineries in Europe and the Southern Hemisphere. Chicago-based Fortune Brands, whose subsidiaries include Jim Beam Brands and Peak Wines International, would pay $5.3 billion to purchase several prominent spirits brands and most of Allied Domecq's California wineries.

All three companies say the bid is likely to be accepted. However, the deal must still go through shareholder and regulatory approvals, and it does not rule out the possibility of a higher competing bid from another major corporation. If all goes according to plan, Pernod's part of the deal should be wrapped up this summer and Fortune's part by the end of the year.

Pernod Ricard currently owns a large Australian wine company, Orlando Wyndham, which produces the Jacob's Creek and Wyndham Estate lines. From Allied Domecq, it will take over New Zealand's largest wine producer (formerly known as Montana), which makes brands such as Brancott and Stoneleigh. In Europe, it will acquire Domecq Sherry and the Champagne houses of Perrier-Jouët and Mumm , along with Mumm Napa in California. It is also acquiring Rioja's Campo Viejo and, presumably, all the other holdings of Spain's largest wine company, Bodegas y Bebidas, although that was not mentioned specifically in the announcements and spokespeople could not immediately confirm that.

Fortune will receive Cockburn's Port and Harvey's Sherry, plus the rest of Allied Domecq's California wineries, such as Buena Vista and William Hill. "The addition of the acclaimed wine brands, including Clos du Bois, to our Geyser Peak and Wild Horse wineries will quadruple our wine volume and place us among the top five superpremium U.S. wine companies," said Norm Wesley, CEO of Fortune Brands.

Though not specified by name in the sale announcement, Allied Domecq's other California wineries include Atlas Peak, Callaway, Gary Farrell, J. Garcia and Haywood Estate.

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