Drinks giant Diageo, which owns Guinness, has seen its proposed £5.7bn sterling joint bid to buy the Seagram wine and spirits business challenged by US regulators, it emerged today.
US regulator the Federal Trade Commission, in a 5-0 vote yesterday, moved to block the deal - which would see Diageo and France's Pernod Ricard jointly buy Canadian drinks group Seagram from owner Vivendi Universal.
The regulator said the deal could reduce competition and result in higher prices for rum.
Seagram and Diageo are the number two and number three sellers of rum in the US - behind Bacardi - with Seagram selling Captain Morgan Original Spiced Rum, and Diageo selling Malibu rum.
However Diageo made an upbeat statement, saying the FTC, with itself and Pernod Ricard, had agreed to further discussions in an effort to reach a settlement.
Under the proposed deal, Diageo would buy 61% of Seagram's alcohol assets, including Captain Morgan and Myers rums, 7 Crown American whiskey and Sterling Vineyards wines.
Pernod would buy the remainder of the business, including Chivas Regal, Glen Grant, Royal Salute and Glenlivet whiskies, Seagram's Extra Dry gin and Martell cognac, to add to its Wild Turkey bourbon and Havana Club rum.
It has been speculated Diageo could sell its Malibu coconut rum brand in order to secure regulatory approval, with Allied Domecq seen as the most likely buyer.
