LIQUOR ASSETS?
YOU BROUGHT HER!

Diageo, the world's largest liquor company, said Friday (8/18) it will join with French distiller Pernod Ricard to bid for Seagram's $7-billion wine and spirits empire.

Seagram, which has said its drinks business is a "non-strategic asset" in its proposed merger with French utilities and media group Vivendi, declined to comment on the report, according to Reuters News Service.

However, a source familiar with the situation told Reuters an offering memorandum was being prepared and was expected to go out before the end of August.

Investment bank Morgan Stanley is expected to publish its book with financial facts on Seagram's drinks unit within weeks, kick-starting the auction process. Sources said the Seagram drinks unit would fetch $7-8 billion.

If this deal went through, it would mix a veritable cocktail of the world's top brands. Seagram has Chivas Regal Scotch, Martell cognac, Crown Royal Canadian whiskey, Captain Morgan spiced dark rum and the distribution rights for Absolut vodka. Diageo, which is the parent company of Burger King and Guinness, has Johnnie Walker Scotch, Smirnoff vodka, Gordon's gin and Baileys liqueur. Pernod's brands include Wild Turkey bourbon, Jameson Irish whiskey, Havana Club rum and France's traditional aniseed spirits, Ricard and Pernod.

On Wednesday, Seagram CEO edgar bronfman',390,400);">edgar bronfman',390,400);">Edgar Bronfman Jr., whose company also owns Universal Studios, Universal Music Group and theme parks, reiterated to reporters that he wanted to sell off the 76-year-old family-run liquor side of the business.

"As part of the Vivendi-Universal merger, we plan to sell our spirits and wine business. (But) because we are currently in discussions with our advisers as to how best to monetize these assets, I can't comment extensively."

In a joint statement in London Friday, Diageo and Pernod said they had struck a deal to split up the Seagram drinks business 50-50 if their bid were successful, with agreement over who would get which brands. "Diageo and Pernod Ricard announce that they have agreed to work together to make an offer for Seagram's wines and spirits business in the forthcoming disposal process," the companies said in a statement.