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Wednesday, 13 December, 2000, 13:19 GMT
Legal battle brews over rum brand
Captain Morgan rum graphic
Captain Morgan: a rum row ahead
A bitter legal battle is set to break out over the ownership of Captain Morgan rum, after Allied Domecq abandoned efforts to win the brand at auction.

We have the Captain Morgan brand. We are quite certain of that. If anyone else wants to dispute that, that's their call

Allied Domecq spokewoman

Allied, the world's second largest wine, beer and spirits group, confirmed on Wednesday that it was not among bidders for a $7bn drinks portfolio, including the rum brand, put up for sale by Seagram.

Allied, which has expanded through distribution and takeover deals in recent months, said it "would not have been in the interest of its shareholders" to pursue the Seagram brands as well.

But Allied confirmed its intention to win the Captain Morgan, a victory likely to require a bitter courtroom battle to achieve.

Ownership claim

The legal dispute centres over Destileria Seralles, a Puerto Rican distiller, which believes that a supply agreement signed with Seagram gives it first refusal should Captain Morgan go up for sale.

Destileria Seralles has struck a deal with Allied Domecq over the claim.

"Our agreement with Destileria Seralles puts us in a position to acquire the Captain Morgan rum trademark and distribution rights," Allied said in a statement on Wednesday.

But the first refusal claim has been hotly contested by Seagram, and the two remaining bidders for its portfolio.

An Allied spokeswoman told BBC News Online:

"We have the Captain Morgan brand. We are quite certain of that. If anyone else wants to dispute that, that's their call."

Expansion plans

While the decision by Allied chiefs to quit the auction removes a chance of closing the gap with sector leader Diageo, they cited a series of deals as evidence that the firm is making progress with expansion plans.

Mumm champagne logo
Mumm: now part of the Allied portfolio

Allied on Wednesday announced the purchase of champagne houses GH Mumm and Perrier-Jouet for 575m euros.

The purchase, from Hicks, Muse, Tate & Furst, "adds two world-class premium champagne brands to our portfolio and supports our objective of continuing to build a global wine business", Allied's chief executive Philip Bowman said.

The firm last month secured exclusive rights to distribute Stolichnaya vodka in the US.

"Through the champagne, rum and vodka transactions, we have substantially achieved the... objectives that might have been obtained through the sale of the Seagram wines and spirits business," Mr Bowman said.

Diageo favourite

Allied's withdrawal leaves an alliance of Diageo and French-based Pernod Ricard the favourite to win the Seagram portfolio.

A consortium formed by Bacardi, Swedish vodka firm Vin & Spirit, and Brown-Forman, the owner of Jack Daniel's is also bidding for the brands.

Seagram is selling its drinks empire to concentrate on its entertainment holdings, including Universal Pictures, and a merger with French-based Vivendi.

The winning bidder for the Seagram brands, which include Chivas Regal and Glenlivet whisky, is expected to be announced on Monday.

Shares in Allied stood 7p lower at 409p in lunchtime trade in London on Wednesday.

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See also:

12 Dec 00 | Business
Seagram's drink race nears end
30 Oct 00 | Business
Watchdogs clear $24bn media merger
13 Oct 00 | Business
EU clears Vivendi-Seagram merger
18 Aug 00 | Business
Drinks firms mix for takeover bid
04 Jul 00 | Business
Rum row turns sour
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