UK scribe awakes after his hols:

Whilst the Editor has been away sampling the delights of West Indies cricket and generally been on the tiles in the Caribbean, world markets have continued their merry way oblivious to his plight...(ie: Will they win this week? Should I go for a swim? Or have another Daiquiri?)

Allied Domecq - taking the proverbial?
Seasoned and wiser observers than most in the City (Ed - "It's all about a quick buck 'innit!") have mused why Allied Domecq - the number 2 spirits /wine company in the world - has put itself up for sale by agreeing to be purchased (but with a pre-nuptial break fee) by the number 3 company, Pernod-Ricard. The sceptics wonder why 3 is after 2 and not the other way around.

What's wrong with the status quo? Or growth by small acquisitions and good marketing? The usual guff is put about; synergies; Allied is tired; Allied couldn't take over Pernod because of the family shareholding (though, note, it is a long way from control); and so forth. So one heavily indebted company gets to take over a better company with a little help from their friends.

Here are the real answers:

  • Fat fees for the investment banks - so they are driving the deal
  • Short term investment gains for the "investment community"
  • The CEO, Mr Bowman, gets £15m plus here and now with no tedious wait to get a lesser sum as the options gradually vest and no need to grow the business himself (well you would too, wouldn't you!)

Now call me old fashioned but not one of the above reasons does anything for the employees who will lose their jobs, HMG Exchequer or UK plc.

More jottings shortly...

Bookmark and Share


Related Posts with Thumbnails