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Published:  23 July, 2008

The protracted sell-off of the Seagram drinks division is facing another setback, after the US Federal Trade Commission (FTC) blocked the Diageo/Pernod Ricard takeover bid. Initially agreed in January, subject to regulatory approval, the 5.5 million deal has run into trouble because of concerns over rum. The FTC is worried that Diageo, which already owns Malibu, would effectively form a duopoly with Bacardi in the US rum market if it acquired the Captain Morgan rum brand, as the terms of the deal dictate. Despite the ruling, both Diageo and Pernod Ricard said they were confident the deal would go through, with the off-loading of Malibu by Diageo being the most likely course of action. The FTC has blocked the deal, but not completely - they have left the door open for negotiations,' said Isabelle Thomas, European media relations director at Diageo. We have 20 days (from 26 October) until the Commission makes its recommendations to the US courts, and we are looking at a number of options, one of which would be dropping Malibu.' We are disappointed by the result,' added Patrick Ricard, CEO of Pernod Ricard, but we are satisfied that an appropriate solution can be found.' Captain Morgan, which represents 4.3 million 9-litre case sales a year, is already at the centre of a dispute between Diageo and its nearest rival, Allied Domecq. Allied claims to have acquired the rights to the brand from the original Puerto Rican owner, Distilleria Serrales. Diageo and Seagram deny the claims. * Pernod Ricard has welcomed the announcement that the Seagram deal has been cleared by the Competition Bureau in Canada. This allows the Canadian Investment Review Division to recommend to the Industry Minister that the transaction be approved. (The acquisition has already been cleared by the EU authorities.)