Pernod Ricard buys out Allied Domecq
In what is the biggest European financial deal this year so far, the #2 supplier of spirits in the world is buying out most of the assets of #3. French company Pernod Ricard will spend over $14 billion in cash and stock to buy out British rival Allied Domecq. Some of the assets with also go to smaller US company Fortune Brands.
The deal brings together two of the great portfolios of global brands in the hard liquor and wine markets. It will make Pernod almost as big as the #1 spirits company, UK-based Diageo. It will particularly improve Pernod's position the US, where its flagship aperitifs are not big sellers.
Pernod gains the brands Ballantine's scotch whiskey, Kahlua liqueur, Malibu rum, Tia Maria cream liqueur, and Beefeater's gin. It will also get a variety of worldwide wine brands, including Mumm's champagne. These will be added to premium brands that Pernod Ricard already owns, including Wild Turkey bourbon, Chivas Regal scotch, Seagram's gin, Havana Club rum, Martell cognac, and Bushmills and Jameson Irish whiskeys.
Fortune Brands will pick up Allied brands Maker's Mark bourbon, Canadian Club whiskey, Sauza tequila and Courvoisier liqueur, along with Pernods's Larois gin, which sells mostly in Spain. Allied Domecq also distributed Russian vodka brand Stolichnaya, but that contract may be cancelled and so up for grabs due to the deal.
It is assumed that Allied's fast-food operations, Dunkin' Donuts, Baskin Robbins, and Togo's will be sold or spun off, so Pernod can concentrate on alcoholic beverages. Dunkin' Donuts in particular is doing very well, so it should bring in a good sum.
This move illustrates the reductionist nature of oligopolies, showing how #2 and #3 join up once again to compete better with #1, just as in the video rental business and many others. What were three dominant companies are now two.
10:05:14 PM 
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