Diageo has decided not to buy the Montana wine business from rival Pernod Ricard. The announcement follows Pernod's granting to Diageo in June of an exclusive option to purchase the business, once it had bought Montana's owner Allied Domecq in July. The option was offered at the time as part of a deal to prevent Diageo entering negotiations elsewhere with a view to launching a counter-bid for Allied.

In a statement yesterday (19 October), Paul Walsh, Diageo's CEO, said: "Diageo gained the option over the Montana wine assets as a result of Pernod's acquisition of Allied Domecq. We have now examined the opportunities that the Montana business presents and we have concluded that it does not fit our investment criteria and have decided not to proceed.

"We recognise that wine is a growing category and that our scale can deliver top and bottom line synergy benefits for wine acquisitions. We will add selectively to our wine business, especially within the premium segment, as we have done with our recent Chalone acquisition."