Drinks giant Allied Domecq has confirmed it is the subject of takeover interest from rival French group Pernod Ricard.

The Bristol-based company, which counts Beefeater gin and Malibu among its brands, said it was holding talks with Pernod.

The stock market value of Allied shot up 16 per cent to almost £6.9 billion following a brief statement in which the UK company said Pernod was working with Jim Beam bourbon maker Fortune Brands on a potential takeover.

Allied said: "The board confirms that it is in discussions with Pernod Ricard, which is working with Fortune Brands, regarding a potential offer for Allied Domecq.

"These discussions are at an early stage and there can be no certainty that an offer will ultimately be forthcoming. "A further announcement will be made in due course," the company added.

Allied made the statement in response to reports, which first indicated six weeks ago that Pernod was eyeing it up.

The involvement of Fortune is likely to enable the proposed deal to overcome competition issues as the US firm would be able to take on some of Allied's brands.

It would also allay fears among analysts that Pernod would incur too much debt by pressing ahead on its own.

Any offer for the company by Pernod could flush out other bidders, with drinks giant Diageo previously said to be interested in Allied's wine brands.

Allied, which has 13,000 staff worldwide, also owns Stolichnaya vodka, Tia Maria and the food brands of Dunkin Donuts and Baskin-Robbins.

The key brands in the Pernod estate include Havana Club, Jacob's Creek, Jameson and Martell.

In 2001 it acquired twothirds of Seagram's drinks portfolio in a move that doubled its size in the spirits sector and made it one of the top three players in the wine and spirits market.

Analysts said any bid from Pernod could value Allied at up to 650p a share - giving it a stock market capitalisation of around £7.2 billion.

Jeremy Batstone of Charles Stanley Stockbrokers said the interest from Pernod had not come as a surprise, although he warned many hurdles remained.

He added: "There will be a lot of regulatory interest in any offer. We are still in the foothills of what could be quite a long slog." Shares closed up 96p at 633p.