SWEDEN: V&S denies Allied is favoured Seagram winner

By Elliot Lane | 21 August 2000

Sweden's Vin & Sprit (V&S) has denied claims it would prefer Allied Domecq over Diageo/Pernod Ricard to win the prospective bidding war for Seagram's Spirits and Wine division.According to the UK newspaper Sunday Business, V&S, which owns Absolut vodka but has granted distribution rights to Seagram outside Scandinavia worth £2.2 billion, would favour Allied because it fears Diageo's ownership of the Smirnoff vodka brand could mean a "drawn-out investigation by regulators". A spokeswoman for V&S told just-drinks.com: "This is purely speculation on behalf of the press. We would not like to comment."Sweden's financial daily newspaper, Dagens Industri, however, quoted V&S finance director Rolf Cassergren as saying: "We are a piece on the board since we have a large involvement with Seagram. But there are lots of factors in who eventually wins the business."Absolut accounts for 10% of the $665.5m profit generated by Seagram's drinks business, according to the paper.Sources close to Allied Domecq said the company was "pleased with the positive publicity" but had no knowledge of any preferential treatment from V&S. "The auction has not even started and as yet we don't even know what is for sale and what is not," the source said.Allied's CEO Philip Bowman said in an internal memo to the company's staff on Friday that the Diageo/Pernod Ricard bid was "no surprise" because "Diageo has previously made clear its interest in certain brands within the Seagram portfolio." He doubts its success, however, because Diageo "would encounter major anti-trust problems in bidding for the whole business."He reiterated Allied's previous commitment to participate in industry consolidation but said he would not be "drawn into overpaying and thereby destroying shareholder value."