We got a trading halt from Foster’s and Southcorp yesterday, but there’s still no sign that finally some sense might be coming to break the impasse on the Foster’s bid for the stuttering wine giant. But Foster’s is this week expected to announce it’s sweetening the offer with a few cents more to save the face of the Southcorp directors. Heaven help poor Foster’s shareholders, but this deal has obviously consumed their company’s board and management and they can’t see the value in walking away from what is a highly over-priced offer.

The news comes at the same time as a growing number of hard luck stories about wine growers forced to leave mainly red wine grapes on their vines because there’s no demand. It also comes as Pernod Ricard and its joint bidder from the US, Fortune Brands, prepare to reveal (tonight, our time) the terms of their bid for Allied Domecq. That would create a brown and white spirits giant, but with a significant wine stake in Australia through Orlando Wyndham and its Jacobs Creek operation, Australia’s biggest export wine brand.

But could Foster’s be preparing to walk away from the Southcorp offer, leaving the recalcitrant board to suffer the consequences of a plunging share price? Increasing its offer would not do the Foster’s board and management any good with sceptical investors already worried that the offer price is way too high. With a wine glut, especially in red grapes, it’s clear that Southcorp might have an advantage of lower input costs this coming year, but its selling prices for its range of red wines will be crimped.

And that’s not built into the optimistic valuation of Southcorp, nor was it part of the thinking of the Southcorp board when it suggested that Foster’s might like to merge wine divisions and take a hefty swag of Southcorp shares at a ridiculous valuation. Circling is Diageo, the European liquor giant left out of the Pernod-Allied dealings. Will it grab a Foster’s-Southcorp combine after the deal concludes and the Foster’s share price falls?

London-based Diageo is the world’s biggest liquor company, but it faces the second, third and seventh biggest players coming together as two enlarged threats. What better way to respond than snapping up the world’s biggest wine company with a cash-cow Australian beer division to boot?