French drinks group Pernod Ricard is expected to go ahead with the sale of its Irish distribution group BWG, despite potential disruption to its €9 billion (£7.09 billion) joint takeover with Diageo of the Seagram drinks business.

Informed sources said the sale of BWG to either Electra Private Equity or ABN Amro Private Equity was expected within a matter of weeks. One of the private equity groups shortlisted is expected to get the support of the BWG management and a price tag of around €300 million for the business has been mooted. Pernod is selling BWG - along with its Orangina soft drinks subsidiary which it is offloading to Coca Cola for €700 million - to fund its portion of the Seagram takeover.

Doubts over the takeover have surfaced after the United States Federal Trade Commission (FTC) voted to block the takeover because Diageo's assimilation of Seagram's Captain Morgan rum brand would reduce competition in the US market. After Bacardi with its 55 per cent share, Seagram is the second-largest rum brand in the US, with Diageo coming in third through its Malibu and Myers brands.

The combination of Malibu and Captain Morgan would give Diageo 26 per cent of American rum sales. It is thought that the FTC fears this would create an effective duopoly in the American market.

Industry sources said a proposal by Diageo to sell its Myers brand was regarded as insufficient by the FTC and it now seems likely that, to overcome the objections of the regulator, Diageo will instead sell its bigger selling Malibu brand.

The negative ruling by the FTC follows an earlier approval for the Seagram takeover from the European Union.

Diageo and Pernod Ricard will meet the FTC over the coming weeks to try to find a solution to the impasse.

Pernod chairman and chief executive Mr Patrick Ricard said: "The FTC has identified problems with aggregation of rum brands by Diageo, but we are satisfied that an appropriate solution can be found."

In the 2001 financial year, Malibu contributed £73.7 million gross profit to Diageo's premium drinks business, and 21 per cent net sales growth.

However, industry analysts believe a favourable outcome to the dispute is more important for Pernod Ricard than Diageo. Analysts estimate that, while Diageo earnings may rise by around 5 per cent as a result of the acquisition, Pernod's earnings may be boosted by more than 20 per cent.