THE £7.4 billion agreed merger between Pernod and Allied Domecq risks creating over- capacity in bottling and packaging and is likely to lead to job losses within Scotland’s whisky industry, according to observers.

The merger, which creates the world’s second-largest drinks group after Diageo, puts Allied’s giant Ballantine’s brand together with Pernod’s Chivas Regal and extensive malts range. The deal makes whisky the single biggest contributor to the Pernod empire, according to Alan Gray, a drinks analyst at the Edinburgh-based Charles Stanley Sutherland.

But it also creates over-capacity in bottling plants, with large new facilities at Paisley and Newbridge for Chivas and two modern high-speed bottling halls at Dumbarton for Allied.

Chivas is already in the process of closing its Kilwinning plant. As details are worked through, at least one more plant could be earmarked for closure, with Newbridge, by Edinburgh, the most likely candidate.

The warning comes despite assurance from Patrick Ricard, chairman and chief executive of the Paris-based Pernod Ricard, who said when the deal was announced: “At Scotland, in the beginning, there will be no major change.”

At the same time Pernod told analysts that the merger would create cost savings of £205m over three years, higher than expected as Pernod’s merger partner, the American Fortune Brands, is taking on Allied’s extensive distribution network.

Gray agreed that Ballantine’s was “a good fit” with Pernod’s other whisky brands, but expressed surprise that the French company had given up Teachers whisky and Laphroaig Islay malt to Fortune.

He pointed out, however, that Laphroaig would take Pernod’s malt ownership to almost 25% of the market, where it would attract regulatory concerns.

“It looks as if they are being ultra-cautious,” he said. “I believe they are trying to make sure that they have no regulatory problems.”

Gray would not rule out a counter-bid from rivals such as LVMH, Constellation Brands, Bacardi and Brown-Forman.