By Dominique Vidalon and Pascale Denis
PARIS (Reuters) - Pernod Ricard (PA:PERP), the family-backed French spirits group under pressure from activist investor Elliott, will continue to improve its governance, it pledged on Friday.
The statement to Reuters followed news reports the company was likely to make board changes, a move Jefferies analysts said would be an "early win" for Elliott. Pernod is due to hold a board meeting on Jan. 23.
Elliott, which has become more active in Europe in recent years, said in December it had spent around 930 million euros ($1.1 billion) to build a stake of just over 2.5 percent in Pernod. Elliott has called on Pernod to raise profit margins and improve governance.
In particular, it believes Pernod's 14-member board needs to be more diverse and have more independent voices, as many directors are linked to the Ricard family. Elliott does not have a board seat.
So far, the two camps have described contacts, including one on Jan. 15, as cordial and constructive.
A Pernod spokesman said on Friday that while "we have not needed any external input as regards our continuous drive to seek to improve our governance,... we will continue, at the appropriate moment, to announce further changes, once they have been proposed, discussed and adopted by the board and its committee."
On Thursday, BFM Business reported that Pernod, which owns Absolut vodka and Martell cognac, planned to reshuffle its board in the coming weeks, with vice-chairman and former Pernod CEO Pierre Pringuet among those who could step down.
Chief Executive Alexandre Ricard, who has already hired three independent directors and beefed up board expertise, is expected to present his new three-year strategy later this year, though some analysts expect Pernod to give some direction on margins alongside first-half earnings on Feb. 7.
There are, however, doubts that Elliott can change much as the Ricard family controls 15 percent of Pernod's shares and 21 percent of voting rights, while long-time investor GBL owns a 7.5 percent stake and has said its supports the firm's strategy.
The French state also warned in December it wanted "big French companies to have stable and long-term shareholders" and not to be "subject to pressure from shareholders who want short-term profitability."
One unknown is why Elliott is so far taking a less confrontational approach with Pernod than with some other investments.
Sources familiar with the activist's thinking say Elliott could be testing a new template for negotiations with other French companies.
France is famous for protecting its companies against foreign takeovers. In 2005, it rushed to the support of food giant Danone (PA:DANO) in the face of a rumored bid from PepsiCo Inc (N:PEP), which never actually materialized.