Pernod Ricard, the owner of Irish Distillers, is likely to pick up Seagram's Chivas Regal Scotch whisky and Martell Cognac brands if its joint venture bid with Diageo for Seagram's is successful.
Pernod joint group managing director Mr Richard Burrows - until recently managing director of Irish Distillers - would not go into detail on the planned joint bid for Seagram's. But he added that it is no secret that Pernod wants to add a premium Scotch whisky brand to its portfolio. Diageo already owns Johnnie Walker Scotch and would probably face regulatory problems if it tried to add another brand.
"Our major interest is the Scotch whisky business to add to our Clan Campbell and Aberlour brands," said Mr Burrows. "We have made this agreement with Diageo so we can respond quickly once Seagram's begins the sale process. We believe that linking up with Diageo will give us a better chance of success. An opportunity like this is unique." He declined, however, to go into detail on funding of the bid, citing a confidentiality agreement with Diageo.
Diageo itself has previously indicated its interest in Seagram's Captain Morgan's rum and Crown Royal Canadian whisky brands. It is not clear which of Diageo or Pernod Ricard would take on Seagram's distribution rights for Absolut vodka if the joint bid is successful.
"Seagram's business is of great interest to us and would be a logical extension to our focus on beverage alcohol, which we plan to expand organically and by acquisition," said Diageo chief executive designate Mr Paul Walsh.
But the Diageo/Pernod group will face strong competition for Seagram's once the bidding process is put into place by investment bank Morgan Stanley Dean Witter. The sale follows Seagram's merger with Vivendi, which created a $34 billion (€37.40 billion) company focusing on media rather than drinks.
Other likely bidders are the British group, Allied Domecq, and the privately-owned Bacardi, which was previously involved in discussions with Diageo on a joint bid for Seagram's. Industry analysts believe that Seagram's could be sold for more than €8 billion if the imminent auction becomes hotly contested. With the increasing consolidation of the global drinks industry, the remaining big drinks companies will compete aggressively for the Seagram's stable of brands.
Seagram's is the world's thirdlargest spirits grouping, after Diageo and Allied Domecq. Its portfolio of Chivas Regal Scotch, Martell Cognac, Crown Royal Canadian whisky and Captain Morgan's dark rum, along with its distribution rights for Absolut, will make an attractive package.
The Montreal-based group's spirits and wine unit generated $4.8 billion in sales and $684 million in earnings before interest, taxes, depreciation and amortisation last year.
