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Monday, 30 October, 2000, 19:09 GMT
Watchdogs clear $24bn media merger
Drinks and glasses
Pour show: Seagram is encountering problems over the sale of its drinks brands
A new entertainment giant was heading towards launch after competition watchdogs cleared the merger of Canada-based Seagram with France's Vivendi and Canal Plus.

French watchdogs on Monday followed US, Canadian and EU counterparts in passing the merger, which will join Seagram's entertaining holdings, including Universal Pictures, with the internet and telecoms infrastructure being developed by Vivendi.

The deal, which would create a company currently valued at $24bn and named Vivendi Universal, will be put to shareholders of Vivendi and Canal Plus, its pay TV unit, on 5 December.

But the news comes as Seagram's plans to sell its spirits business and concentrate on the merger have become overshadowed by a claim to the Captain Morgan rum brand by little-known Puerto Rican distiller Destileria Serralles.

Rum deal

Destileria Serralles claims an agreement to supply rum to Seagram guarantees it first right of refusal should Captain Morgan, worth an estimated $1.5bn itself, be put up for sale.

The claim was revealed on Friday in a statement from Allied Domecq, which owns Beefeater gin, Tia Maria and Ballantine whisky brands, and is among bidders for Seagram's drinks business.

Seagram also owns Chivas Regal whisky and Martell cognac.

The Puerto Rican firm would excercise its option, and pass on Captain Morgan to Allied, should another bidder scoop the Seagram brands, the release said.

Seagram said on Friday: "Serralles' right of first refusal is only available under certain circumstances. ... Sale of the entire [spirits arm] would not trigger Destileria Serralles' right of first refusal."

But Allied Domecq is "happy with its statement", a company spokeswoman told BBC News Online on Monday.

If Seagram wishes to pursue its claim through the courts "that is their call", she said.

Pernod confident

France's Pernod Ricard, which has joined US drinks giant Diageo in a joint bid for the portfolio, on Monday said it accepted Seagram's position.

"We hold to the statement issued by Seagram saying that this accord has no value," a spokesman said.

Diageo, while declining to comment officially on the dispute, is believed to be more wary.

"We were certainly surprised by [Destileria Serralles'] claim," an insider told BBC News Online.

Diageo shares closed 12p up at 644.5p in London on Monday.

Shares in Allied Domecq closed up 16p at 363p.

In Paris, Vivendi shares gained 1.79% to 82.25 euros

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See also:

13 Oct 00 | Business
EU clears Vivendi-Seagram merger
18 Aug 00 | Business
Drinks firms mix for takeover bid
17 Jul 00 | Business
Diageo confirms Pillsbury sale
04 Jul 00 | Business
Rum row turns sour
22 Jun 00 | Business
Burger King to float
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