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Allied/Southcorp make way

Published:  18 January, 2007

So, it looks like bye-bye Allied Domecq and goodnight Southcorp. Yet more consolidation and rationalisation in the drinks sector. Why should we be any different? Remember there was once a discussion about whether brands could succeed in the wine fixture?

Anyway, both takeovers have been widely predicted. Doubts about Allied have lingered for more years than I care to recall, going back to the days of Allied Lyons when it was a major brewer, with beers like Tetleys, Ind Coope, Castlemaine XXXX and Skol, with Sir Derrick Holden-Brown (Hold em Down' as he was known) at the helm. Ironically, a certain Aussie upstart' called John Elliott (later to serve a prison sentence for some financial malpractice), who was the boss of Foster's, then first and foremost a brewer, cheekily tried to take over the Allied leviathan. In the same way that the current Allied board responded by quickly putting together a portfolio of wine brands, having decided not to buy Seagram, so the then Allied went out and bought the Domecq business.

Allied's Aussie boss Philip Bowman has courted Bacardi without any success (too many family members to deal with - a bit like Unwins). So with the smaller Pernod Ricard controlled by the Ricard family, it was down to Allied to be sacrificed on the altar of consolidation and rationalisation, so that City accountants, lawyers, bankers and shareholders can get their various pay days.

As for Southcorp, the writing on the wall has been writ even larger. After the debacle of the Keith Lambert/Oatley family tenure, it was clear that John Ballard was a safe pair of City hands put in to sort it out, clean it up, insert some sensible reporting lines and get the for sale' sign ready. Diageo was widely tipped as a purchaser, but it doesn't appear to fancy wine - far easier to make Smirnoff and Baileys. So, subject to any last-minute bids, a corporate carve-up is under way, and it will be down to what titbits by way of small, neglected brands fall off the respective corporate tables.

Christian Davis