Diageo awaits FTC approvals

According to industry sources, the world's largest spirits company Diageo may give up one of its rum brands to ensure approval from the US for the purchase of the Seagram drinks businesses, the Financial Times reports. A relatively minor brand, such as Myers's, a dark rum, could be offered for sale to help secure approval from the US Federal Trade Commission. However, the regulatory process may well drag on into October. Last December, Diageo teamed up with the French beverage group Pernod Ricard to buy the Seagram businesses for $8.15bn (Euro8.9bn). The deal will give Diageo control of Captain Morgan rum, should a continuing legal challenge in Puerto Rico concerning ownership of the brand, be unsuccessful. Pernod is thought to face little in the way of regulatory issues over the Seagram deal. Diageo is also waiting for FTC approval of the sale of its Pillsbury food unit to General Mills. The FTC review is not expected to be finished before the end of September. The performance of Pillsbury, which has already suffered during this period of uncertainty, will be closely scrutinised when Diageo releases annual results on September 6. Merrill Lynch is expecting Diageo to report profits of just over £2bn (Euro3.2bn) before goodwill amortisation and exceptionals.