Constellation Needs To Pick Up Its Game

published 26 May 2006

Constellation Brands' indicative offer for Allied Domecq an all-cash offer of some 700p a share by no means indicates that Pernod Ricard, who have already bid for the group, are out of the race, Simon Nixon says on Breakingviews.com. On the contrary, Constellation has realised that it needs access to a lot more information than its rival Pernod was given in order to proceed with a firm offer.That's not too surprising: Constellation's prospective bid for Allied has been a rush job in comparison to that put together by Pernod, who worked on the offer for a number of months. And now the pressure is really on Constellation, who has teamed up with Brown-Forman, Blackstone and Lion Capital. It can only hope that Allied will be willing to give it the extra information it requires. Even then, it is still hard to see how the rival bidders will put together a deal that will make its own shareholders happy, Lex says in the FT. Remember, Diageo is still waiting to launch its own bid.As for Allied Domecq, it needs to now strike a balance between maximising value for its investors, but without compromising commercial confidentiality, Nixon says. Yet as things stand now, Allied will hardly be convinced by Constellation's proposal or even that it is "in a position to make a serious offer" at all.