drinks company Allied-Domecq, makers of Beafeater gin, after the board opted against an initial public offering.

The company will now be unable to raise sufficient money because it does not have access to capital markets.

Speculation about who is going to buy Allied-Domecq had been rife over the past month, with Bacardi in pole position.

But after the board voted not to float the company, a deal with Allied-Domecq seems almost impossible.

And now Allied-Domecq is in limbo after prospects for a merger with French rival Pernod Ricard faded - which would have left Bacardi in a prime position to bid for its rival.

This has left analysts to question the British company's long-term outlook.

"It's more than Pernod. A number of things have come together,'' said Lehman Brothers industry analyst John Wakely.

Stocks in Allied, maker of Ballantine's whisky, have gone down 1.55 percent and Pernod, who make whiskies, aniseed spirits and other drinks, have gone up 1.0 percent. Pernod makes whiskies, aniseed spirits and other drinks.

The two had been rumoured for months as merger partners, but that speculation was dashed on Wednesday when the French government disallowed Pernod's proposal to sell its Orangina soft drink unit to US beverage giant Coca-Cola Co.

Proceeds that would have come from the $755-million Orangina deal were critical to Pernod's strategic plans. Without those funds, its ability to make major acquisitions was doubted.

A French banking source said any combination of Pernod and Allied was off due to external circumstances restricting Pernod's ability to raise financing.

Beyond the collapse of the Pernod deal, Allied's outlook was hurt by the evaporation of other potential buyers, including Bacardi.

Allied has been seen as intent on a major spirits deal since being overshadowed by the 1997 mega-merger that formed spirits sector leader Diageo, also based in Britain. Bacardi would have been well placed to step in and buy Allied -- the world's second-largest spirits group.

Allied is still half the size of Diageo, but the deal with Bacardi would have made the companies able to compete with the new drink giant.

Now Allied, which also makes Sauza tequila and Kahlua liqueur, must focus on cutting distribution costs and broadening its marketing.

The company, late last month reported a nearly six percent fall in annual profits. Allied also owns the fast-food chains Dunkin' Donuts, Togo's and Baskin-Robbins located mostly in America.