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. Last Updated: 07/27/2016

Punch Offers $4.26Bln For Allied's Retail Arm

LONDON -- Britain's Punch Taverns launched its pounds 2.7 billion ($4.26 billion) cash bid Thursday for Allied Domecq PLC's British retail business, linking up with Bass PLC, which will cherry-pick Allied's top pubs if Punch wins.

Privately owned Punch is appealing to Allied's shareholders to accept its bid, which Allied's board has rejected in favor of a pubs-for-shares swap deal with Whitbread PLC that includes tax and synergy benefits for Allied. Allied is selling the assets to concentrate on its drinks business.

Chairman Hugh Osmond said Punch may raise its offer if it gains access to the same financial information provided to Whitbread, whose agreed paper deal was valued at pounds 2.49 billion. He urged Allied shareholders to reject the Whitbread offer at a shareholders' meeting on July 2.

"Our cash is on the table. It is certain, worth more than Whitbread's paper and could be increased if the board of Allied Domecq were to create a level playing field. The board should now at least adjourn its shareholder meeting to enable both offers to be properly considered," he said.

He added Punch's cash offer was irrevocable and unilateral and it had committed and available financing for 100 percent of the purchase price for Allied 3,500-strong chain of pubs, its 50 percent stake in the First Quench drinks store venture and 25 percent share in soft drinks company Britannia.

If Punch's deal is successful, it will sell up to 650 pubs and the Britannia stake to brewing and leisure giant Bass for pounds 985 million, to boost Bass's 2,400 managed pub estate and add to its 50 percent stake in Britannia.

Punch said its deal is equivalent to 258 pence per Allied share, which on Thursday edged 5 pence higher to 603, while Whitbread shares were unchanged at pounds 10.70 and Bass 4 pence higher at 936-1/2 in morning trade.

Bass confirmed its deal with Punch and added it would invest up to pounds 240 million into the Allied's pubs over two to three years, and said it saw the deal extracting an extra pounds 50 million in profits in three years time above current profit levels, by applying Bass's drinks brands and formats to the pubs.