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Allied mulls $3.6B pub sale
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May 3, 1999: 10:09 a.m. ET
Distiller confirms talks with Whitbread on deal involving 3,500 U.K. pubs
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LONDON (CNNfn) - The world's number-two distiller, Allied Domecq, is considering the sale of its 3,500-strong U.K. pub division to rival Whitbread in a $3.6 billion deal.
Allied confirmed Monday that it is in talks regarding the sale of its U.K. retail business. The talks exclude the group's Dunkin Donuts and Baskin Robbins chains.
The proposed deal would double Whitbread's pub and restaurant division to more than 7,200 outlets and could force the company to dispose of or float its brewing division to gain regulatory approval. The beer unit is reported to be worth around $1.1 billion.
Whitbread: hoping to pull more pints?
Allied hopes a sale would pacify angry shareholders. Investors and analysts have become increasingly irritated by the inaction of the board, after management promised to take steps to improve the company's performance over a year ago.
Last week, the group disappointed the market when it reported an 8 percent fall in net earnings. At the time, one analyst described management as "inept" and said that "petty politics" at board level has kept the planned disposal of the pub division on hold.
Observes said Allied would likely use the cash from any sale to consolidate its presence in the spirits industry.
The U.K. stock market is closed Monday for the May Day public holiday.
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Allied Domecq
Whitbread
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