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Diageo to bid for Seagram's brands.

Diageo, whose brands include Johnny Walker, Guinness and Burger King announced Friday it has linked up with Pernod Ricard of France to bid for Seagram Co.'s alcoholic beverages business.

Seagram, a liquor and entertainment company headquartered in Montreal,, is expected to put its drinks brands up for sale as a result of its $30 billion acquisition by the French media and utility conglomerate Vivendi.

Analysts said Seagram's liquor business, whose brands include Absolut vodka and Chivas Regal, could command a price of $9 billion.

Diageo said it declared its interest in Seagram to end recent speculation about its intentions. "Diageo and Pernod Ricard announce that they have agreed to work together to make an offer for Seagram's wine and spirits business in the forthcoming disposal process," it said in a statement that gave no further details.

Diageo had spoken previously with several other companies, including Bacardi, about possible joint bids for Seagram's brands. It finally selected Pernod Ricard as the best partner, said a company spokeswoman who spoke on condition of anonymity.

Pernod Ricard has been seeking to expand its own drinks business, which includes Wild Turkey bourbon and Havana Club rum. In November, the French government struck down Coca-Cola Co.'s bid for Pernod Ricard's soft drinks brand, Orangina.

Seagram has postponed the sale of its liquor and wine business since June for a number of reasons.

Some members of the Bronfman family that founded and run the company are said to oppose its dismemberment. Also at issue are profitable distribution rights to Absolut vodka, which are controlled by Sweden's state-owned Vin & Spritcentralen AB.

"The indications from Seagram are that they want to dispose of their spirits assets in one go. They don't want to dribble them out. It would just be too messy," said Simon Hales, an industry analyst at HSBC in London.

For Pernod Ricard, a winning bid for Seagram's brands would expand its reach in Europe and give it access to distribution channels in the United States.

For Diageo, the acquisition would reinforce its dominant position in many drinks categories and at the same time deprive its British rival, Allied Domecq PLC, of a chance to acquire a stable of coveted brands, Hales said. Allied Domecq owns Ballantine's Scotch, Canadian Club whiskey and Beefeater gin, as well as the Dunkin' Donuts and Baskin-Robbins snack food chains.

"Allied really needs this business to [INCOMPLETE]
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Publication:Modern Brewery Age
Article Type:Brief Article
Geographic Code:1CANA
Date:Aug 28, 2000
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