Far from playing its expected role of Olympian sideline-sitter, loftily watching lesser entities scrabble to snatch and dismember the globe's second largest drinks company, Allied Domecq, world numero uno Diageo is now poised to enter the fray.

Word on the financial grapevine is that Diageo has convened urgent meetings with other booze barons with the aim of forming a bidding consortium. If successful, this will create a three-sided contest with Pernod Ricard/Fortune Brands and Brown-Forman/Constellation Brands [WAMN:26-Apr-05].

Bermudan white rum maker Bacardi is seen as a potential partner for Diageo, whose unexpected intervention comes just two months after an unequivocal statement by ceo Paul Walsh that it would not bid for Allied. At that time, the honcho declared he would be interested only in "any brands that became dislocated as a result of the auction process".

The late intrusion by Diageo - formed in December 1997 through the merger of GrandMet and Guinness - is all the more surprising as it will almost certainly provoke disapproval from European and US competition regulators.

So why the unpropitious elbowing up to the bar counter? The Times quotes an anonymous drinks analyst who believes that Diageo has nothing to lose - bar a few million pounds in fees to investment banks and other coat-tail skiers.

"Allied is just about the last consolidation play that's left so it has nothing to lose," opines the haruspex. "At worst, it could force one of its closest rivals to overpay. But if it does manage to get a deal past the regulators, it will find itself in a peerless position."

Data sourced from The Times Online (UK); additional content by WARC staff