Whitbread offer for Allied

LONDON, JULY 4: Retail major, Whitbread PLC raised its offer for Allied Domecq PLC's pub chain to 2.877 billion pounds 4.53 billion, ...

LONDON, JULY 4: Retail major, Whitbread PLC raised its offer for Allied Domecq PLC8217;s pub chain to 2.877 billion pounds 4.53 billion, topping the latest all-cash bid by rival Punch Taverns.

Punch Chairman Hugh Osmond immediately retorted by saying that his company would do quot;whatever it takesquot; to win the bidding war.

Whitbread Chief Executive David Thomas said he8217;d quot;be amazedquot; if Allied8217;s board fails to recommend Whitbread8217;s bid and said he expects Whitbread8217;s share to benefit from the move.

Punch Taverns, which on Tuesday sweetened its cash bid to 2.85 billion pounds from 2.7 billion pounds, said Whitbread8217;s offer quot;will massively destroy shareholder valuequot; as the rival8217;s share comes under selling pressure.Allied Domecq wasn8217;t immediately available to comment. But it doesn8217;t have long to make a decision on the two offers, since Punch has said its offer will lapse at the end of Monday.

Whitbread is offering 1.5 billion pounds in cash and 135 million Whitbread shares. The offer is worth 2.877 billionpounds based on a share price of 1002 pence. A mix-and-match of other options, as well as a loan-note alternative, will also be offered to Allied shareholders. Whitbread8217;s previous all-share offer was worth about 2.4 billion pounds. Whitbread shares closed up 9 pence to 1,001 pence Friday, while Allied Domecq shares ended flat at 620 pence. Whitbread8217;s Thomas said the deal will help its earnings from the first full financial year following completion. He declined to say whether Whitbread would be prepared to further raise its bid, if Punch comes out with a higher offer.

Whitbread said its original offer comprised only shares because Allied Domecq had asked for shares. If its new cash and share offer is recommended, Whitbread will abandon plans for a share buyback, Thomas said.

The revised offer wasn8217;t put to the board of Allied Domecq before it was publicly announced Friday afternoon, so Thomas said he had yet to get any feedback from Allied. Whitbread8217;s board formally approved the revised offer Fridaymorning, he said.

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The offer raises the question of whether the government, which has required Whitbread to sell off pubs as it seeks to expand into the brewery business, would allow the latest offer. Unlike Punch8217;s offer, Whitbread8217;s offer must be approved by the Office of Fair Trade U.K. laws prohibit the joint ownership by a brewer of more than 5,000 pubs.