Seagram began presentations of its spirits business yesterday to the three international bidding groups involved in the auction.

The companies concerned, Allied Domecq, a joint Pernod Ricard/Diageo venture and a latecomer to the table in the form of a joint Bacardi-Martini/Brown-Forman bid (according to UK press reports) are each believed to have offered $7 billion for the unit.

According to UK sources, the Seagram management will make three presentations, each lasting two days. Diageo and Pernod Ricard have already heard their presentation and Brown-Forman and Bacardi are next in line. Allied Domecq is last on the list and has yet to sign the confidentiality agreement required by Seagram because it is still holding out for a possible partner.

Despite the strong competition, Allied Domecq still remains the slim favourite because it can deliver better cost savings. Many analysts also believe it may be able to raise the capital needed without issuing new equity if it were to sell its food concerns Baskin Robbins and Dunkin' Donuts.

Allied is also the most likely of the bidders to retain the distribution rights for Absolut from the sale. However, V&S, the Swedish owner of Absolut, it is believed, has decided to wait until later in the process before backing one of the groups. One industry observer said: "I am sure Allied has talked to V&S, the fact they have not teamed up already could mean there are problems."

An MBO launched by key Seagram management last month was once seen as a possible contender, but although it is thought they could raise the necessary capital, the distribution synergies available to a multinational operator are not available to the managers.

The Brown-Forman/Bacardi bid is a latecomer to the process. Morgan Stanley Dean Witter, the investment bank advising the sale, is known to have been pressurised by French conglomerate Vivendi to find a third bidder to drive up the price.

Crown Royal and Four Roses bourbon are rumoured to be Brown-Forman's main objectives in entering the auction. Both brands are inextricably linked by Seagram's production facilities. Crown Royal stock is used to produce Four Roses, which is regarded as a Canadian whiskey rather than a bourbon in the north American market. This puts the Kentucky-based company on a collision course with Diageo's interests.

According to Canadean, Crown Royal is a 3m nine-litre case volume brand, and delivers $40 profit per case (total brand profit to spirits and wine division - $120m), while Four Roses has a volume of 0.8m nine-litre cases, and generates $11 profit per case and an overall total profit of $10m to Seagram's wine and spirit operation.

Although the bid's hopes rest on competition questions thrown up by both the Allied and Diageo/Pernod Ricard bids, analysts have questioned whether the Americas' bid possesses the necessary financial clout to be a real threat to the European bids.

Chris Brook-Carter and Elliot Lane