French spirits group Pernod Ricard is looking at mounting a takeover for Allied Domecq, the Wall Street Journalhas reported.
Shares in Allied Domecq,the world's second-biggest spirits group, opened 5 per cent higher today and were quoted 6.3 per cent firmer at 522 pence in early trade, while Pernod lost 2 per cent to stand at €104.40.
Allied Domecq declined to comment on "market speculation", while Pernod could not be immediately reached for comment.
The Wall Street Journalsaid the two beverage companies have not yet been in contact about a deal and that Pernod may still decide to shelve any approach.
FT.com, the online edition of the Financial Times, said Pernod had retained investment bankers to "actively look for acquisitions" with Allied Domecq "thought to be its first choice".
Pernod, which owns Chivas Regal and Jameson whisky brands, asked JP Morgan and Morgan Stanley to explore potential targets, the FTsaid. Both investment bankers would not comment, it added.
Allied Domecq is valued at £5.4 billion sterling, excluding debt, it said.
The Timesonline edition also said that Pernod's rapidly decreasing debt had set the drinks industry "musing" over the possibility that the French company was eyeing Allied Domecq.
The two companies had complementary portfolios but a tie-up was unlikely to interest Mr Philip Bowman, the Chief Executive of Allied, who has made no secret of his own acquisitive ambitions, the Timessaid.