25th May 2005 07:02
Allied Domecq PLC25 May 2005 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO ORFROM AUSTRALIA, CANADA OR JAPAN ALLIED DOMECQ PLC - RECOMMENDED OFFER BY PERNOD RICARD S.A. Allied Domecq PLC ("Allied Domecq") announces that it is today posting toshareholders the document detailing the Scheme of Arrangement ("the Scheme")relating to the recommended Offer ("the Offer") by Pernod Ricard S.A. ("PernodRicard") to acquire the entire issued and to be issued share capital of AlliedDomecq. The Court Meeting and Extraordinary General Meeting of Allied Domecqshareholders to approve the Scheme will be held on 4 July 2005. The Offer Under the terms of the Offer, shareholders will receive 545 pence and 0.0158 NewPernod Ricard shares for each Allied Domecq share. Based on a Pernod Ricardshare price of 116 Euros, the Offer values each Allied Domecq share at 670 penceand the existing issued share capital of Allied Domecq at approximately £7.4billion. As at 20 April 2005, the day prior to the announcement of the Offer,the closing price of a Pernod Ricard share was 116.9 Euros. The value of the Offer of 670 pence per Allied Domecq share represents a premiumof approximately 36.2 per cent to the closing price of 492 pence per share on 3February 2005, the last business day before speculation about a potential offerfrom Pernod Ricard, and a premium of approximately 24.8 per cent to the closingprice of 537 pence per share on 4 April, the last business day before AlliedDomecq announced that it was in preliminary discussions with Pernod Ricard. At the close of business on 24 May 2005, the implied value of the Pernod Ricardoffer was 679 pence per Allied Domecq share, based on a closing middle-marketshare price of 123.4 Euros for each Pernod Ricard share and an Euro/Sterlingexchange rate of 1.4531 Euros per pound sterling. The closing middle-marketshare price for the Allied Domecq share was 694 pence. That price includes thedeclared interim dividend of 6.5 pence per share which Allied Domecqshareholders on the register at close of business on 10 June remain entitled toreceive. Background to and reasons for recommending the Offer In his letter to shareholders contained with the Scheme Document, AlliedDomecq's Chairman Sir Gerry Robinson describes the background to the Offer andthe reasons why the Allied Domecq Board has unanimously recommended that itsshareholders vote in favour of the Offer. He describes the way in which consolidation has been a focus for speculation andcomment in the wines and spirits sector for several years. The two most significant developments in the past decade have been the formationof Diageo itself in 1997 and the sale of Seagram's wines and spirits business toDiageo and Pernod Ricard in 2001. Over the past five years, Allied Domecq has delivered high levels of organicgrowth in a buoyant spirits sector. More recently, while the Group has continuedto outperform and has delivered consistently strong earnings growth, this hasbeen achieved against much more difficult trading conditions in many markets. In these increasingly challenging market conditions, the need for furtherconsolidation in the distilled spirits industry has become increasinglyapparent. Given the shareholder structures of the majority of Allied Domecq'ssignificant competitors, there was always the possibility that Allied Domecq'sparticipation in such consolidation would be as the subject of an acquisitionrather than as the acquirer. This recommended Offer from Pernod Ricard provides Allied Domecq Shareholderswith the ability to crystallise the value that has been achieved and thepossibility of continuing to participate in the future success of AlliedDomecq's brands within an enlarged Pernod Ricard business. The indicative proposal from the Constellation Consortium In the letter to shareholders, Sir Gerry states that on 13 May 2005 AlliedDomecq received an indicative proposal from Constellation Brands Inc supportedby the Brown-Forman Corporation, Lion Capital (formerly Hicks Muse Europe) andBlackstone Group (together "the Consortium"). The indicative proposal is highlyconditional and is subject to considerable further due diligence by theConsortium, confirmation of financing and a number of other significantconditions. It is too early to determine whether the indicative proposal cantranslate into a firm offer for Allied Domecq. The Board will continue to discuss this indicative proposal with the Consortiumto establish whether the conditionality can be removed. The Panel on Takeoversand Mergers has ruled that, by 5.00 p.m. on Wednesday 29 June 2005, theConsortium must either announce a firm intention to make an offer for AlliedDomecq pursuant to Rule 2.5 of the City Code or announce that it will notproceed with an offer for Allied Domecq. In the event that the Consortiumannounces that it will not proceed with an offer for Allied Domecq, the membersof the Consortium and any persons acting in concert with them will, except withthe consent of the Panel, be unable to make an offer for Allied Domecq for sixmonths from the date of such announcement. The Board of Allied Domecq recognises its fiduciary duty to consider any higheror preferable offer should one be made. To date, no such an offer has been made. Recommendation to shareholders The Board of Allied Domecq unanimously recommends shareholders to vote in favourof the Offer at the Court Meeting and the Extraordinary General Meetingscheduled for 4 July 2005. Current trading and outlook for Allied Domecq In the two months since the end of its half year on 28 February 2005, AlliedDomecq has continued to achieve volume growth from its core spirits brands andpremium wines. The QSR business continues to grow. This satisfactory result hasbeen achieved in spite of the inevitable disruption caused by intense mediaspeculation concerning a possible bid for Allied Domecq by Pernod Ricard. Anapproach from Pernod Ricard was announced on 5 April 2005 and the Offer wasannounced on 21 April 2005. The Group has subsequently announced an approachfrom the Consortium which has led to further media speculation. Allied Domecq has taken action to respond to the changes in behaviour from somecustomers, suppliers and competitors. Current forecasts support expectations ofhigh single digit earnings per share growth translated at constant foreignexchange rates for the year ending 31 August 2005. While these indications areencouraging, the unavoidable disruption caused by the Offer and the approachfrom the Consortium may yet have a short term impact on the performance of thebusiness. END For further information: Press Enquiries: Stephen Whitehead, Director of Group Corporate Affairs +44 (0) 207 009 3927 +44 (0) 7880 783532 Anthony Cardew, Cardew Group +44 (0) 207 930 0777 +44 (0)7770 720 389 Investor Enquiries Peter Durman, Director of Group Investor Relations +44 (0) 7771 974817 (Copies of the Scheme Document will be available on the investor relationssection of the Allied Domecq website allieddomecq.comfrom 25 May 2005.) Cautionary statement regarding forward-looking information This announcement includes forward-looking statements. All statements other thanstatements of historical fact included in this document regarding the business,financial condition, results of operations of Allied Domecq or the Allied DomecqGroup and certain plans, objectives, assumptions, expectations or beliefs withrespect to these items and statements regarding other future events orprospects, are forward-looking statements. Should one or more of the risks oruncertainties associated with such forward-looking statements materialise, orshould assumptions underlying such forward-looking statements prove incorrect,actual results may vary materially from those described herein. Allied Domecqassumes no obligation to update or correct the information contained in thisannouncement. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Princes (wi)