UK: Absolut pulled from Seagram deal

Swedish drinks monopoly Vin & Sprit is believed to be pulling the lucrative distribution rights for Absolut Vodka out of the Seagram portfolio for the upcoming race for the Canadian drinks company.The result of the decision will be to wipe billions of dollars off the value of Seagram's drinks arm. V&S it is believed wants to sell its distribution rights off in a piecemeal fashion geographically.One analyst said that the loss of Absolut could see Seagram's value fall from $8.4 billion to around $6 billion.Recent rumours that V&S and Allied Domecq would submit a joint bid are now considered unfounded. It is seen unlikely that V&S, as a government body, would want the secondary and tertiary brands that Allied Domecq spun off. The deal for the Absolut rights are now expected to be negotiated after Seagram has been sold.The removal of Absolut might be to Allied's favour anyway. The smaller bidding price will be in Allied's favour, who are financially weaker than nearest rivals Diageo, but who can deliver far greater cost savings than anyone else on the deal.