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Diageo the favourite to win Seagram drinks portfolio

The bidding for Seagram’s wine and spirits business could end today as Diageo’s joint £5.8bn bid with Pernod Ricard of France looks set to scoop the drinks portfolio.

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LONDON (Brand Republic) – The bidding for Seagram’s wine and spirits business could end today as Diageo’s joint £5.8bn bid with Pernod Ricard of France looks set to scoop the drinks portfolio.

This would extend Diageo’s lead in its field, which would be double the size of its closest rival Allied Domecq.

The Anglo-French partnership has beaten off competition from Allied Domecq and a consortium led by Bacardi and US company Brown Forman.

The deal suffered a last-minute delay as Vivendi, Seagram’s partner in media giant Vivendi Universal, tried to encourage Bacardi to increase its bid in order to get a higher price for the Seagram division.

However, the price of the company could come down if a legal dispute over the rights to the Captain Morgan rum brand fails to be resolved in Seagram’s favour. Puerto Rican distiller Destileria Serralles, which manufactures the drink, claims it has rights to buy the brand. The price of Seagram’s drinks business is expected to drop by between $1.5bn and $2bn if the Puerto Rican company wins the case.

Diageo and Pernod Ricard agreed their joint-bid application about two weeks ago. If the deal is signed today, the French company is expected to add Seagram’s Scotch whisky operation -- including Chivas Regal, Passport and Glenlivet single malt and Seagram’s Gin -- to its stable, which includes Ricard, Pastis 51 and Jameson’s Irish whiskey.

Diageo, which owns Johnnie Walker whisky and Smirnoff vodka, is expected to scoop Captain Morgan dark rum, Crown Royal and VO Canadian whiskies, and Seven Crowns American blended whiskey. The Sterling Californian wines division would be added to Diageo’s Napa Valley wine business. Seagram’s Martell cognac is to be sold off.



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