EU: Pernod must sell whiskies for Allied deal

Related tags Pernod ricard Scotch whisky Whisky

The European Commission has approved Pernod Ricard's bid for Allied
Domecq, but will force the firm to dump extra whiskey brands and
distribution agreements before a deal goes through, reports
Chris Mercer.

The Commission said its clearance was conditional on Pernod Ricard selling its Scotch whisky brands Glen Grant, Old Smuggler and Braemer as well as the Portuguese brandy brands 1920 and CR&F.

"The Commission's investigation showed that the acquisition by Pernod Ricard of the Allied Domecq whisky brands would give rise to competition concerns as the merged entity would have a particularly strong position in a number of national markets, in particular in the Scotch whisky and Irish whiskey categories,"​ it said.

Glen Grant is the second biggest single malt whiskey in the world in terms of volume.

Pernod has now agreed to sell these brands as well as terminate certain distribution agreements relating to the Tullamore Dew Irish whiskey brand and, for Portugal only, distribution of Moët & Chandon Champagne.

The Commission said that without this, Pernod would have dominated the distribution of brandy and champagne in Portugal. Possible buyers have yet to come forward.

Generally, the ruling can be regarded as a success for Pernod, which will have its £7.4bn(€10.3bn)-80 per cent cash bid subjected to Allied Domecq shareholders in a few days' time.

If successful, Pernod would become the world's biggest wine and spirits group, grabbing core spirits brands such as Beefeater gin, Malibu and Stolichnaya vodka as well as premium wines including Montana and Campo Viejo.

Competition Commissioner Neelie Kroes said: "Whilst this transaction strengthens Pernod Ricard's general position in the wines and spirits sector, the proposed remedies will reduce the direct overlaps and therefore maintain effective competition on all affected markets."

"This clearance is an important step in this transaction,"​ said Patrick Ricard, Pernod's chairman. "The transaction offers us exciting opportunities and will position Pernod Ricard firmly as the number two in the worldwide spirits business and number four in wines."

The firm has already planned to sell a range of Allied's brands, including Canada Club and Courvoisier, to US firm Fortune Brands for £2.8m (€4.1m) cash to avoid infringing competition laws.

Any deal between Pernod and Allied would also be subject to the approval of competition authorities in the US and Canada.

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