Constellation Brands has opted not to pursue a competing offer for Allied Domecq, the subject of an agreed £7.5bn bid by Pernod Ricard. The decision leaves the door open for buyout giant Blackstone to prepare its own bid for Allied’s non-core restaurant business.
Blackstone is understood to have participated in the original deal to gain access to the restaurant chain, which includes Dunkin’ Donuts and Baskin Roberts. A deal would value the business at £1.1bn and would be likely to attract competition from other private equity firms and potential trade suitors.
The Constellation Brands-led consortium, which included Blackstone, Lion Capital and Brown-Forman, said in a statement that it would not lodge a counter-bid for the entire group after it had completed due diligence. Constellation Brands CEO Richard Sands said the consortium concluded that “the economics [do not] justify an offer” for Allied Domecq.
In an associated sector, private equity giant KKR has been linked to a potential bid for all or part of soft drinks to chocolate company Cadbury-Schweppes. Investors have piled into the business, which has a total market cap of over £10bn, on rumours that KKR is looking to buy the drinks division. The buyout firm is also reportedly looking at an acquisition of drinks company Britvic, which it would combine with Cadbury-Schweppes.
Stock in Cadbury Schweppes had jumped about 10p on the rumours earlier this week to 540p. Shareholders in Britvic have also considered plans for a flotation, however. KKR is also one of the frontrunner in the auction to buy Kwik-Fit, the UK car parts retailer.