Diageo signals Malibu sale to secure Seagram

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The Independent Online

Diageo has signalled that it may be willing to sell its Malibu rum brand in a desperate attempt to salvage its $8.15bn (£5.5bn) joint purchase of Seagram's wine and spirits business.

US anti-trust regulators blocked the deal on Tuesday evening because of concerns that it would stifle competition in the US rum market, creating a duopoly with Bacardi, the market leader.

Paul Walsh, Diageo's chief executive, has three weeks to rescue the deal before the US Federal Trade Commission files a formal complaint. "Everybody involved really wants this deal to go through and wants to make it happen," said a spokeswoman, adding that the company was considering divesting its Malibu coconut-flavoured white rum in an attempt to retain the jewel in the Seagram portfolio – its Captain Morgan rum.

Analysts said Diageo should relinquish Malibu to close the transaction, citing Allied Domecq, a rival drinks group, and Brown Foreman of the US as possible buyers. Malibu could fetch as much as £700m, analysts said.

Diageo shares fell 3p to 680p.