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Diageo faces bar room brawl
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January 19, 1998: 8:24 a.m. ET
Allied Domecq and Seagram discuss forming major drinks competitor
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NEW YORK (CNNfn) - Allied Domecq reportedly is taking steps to heat up the race with the alcoholic beverage industry's latest global goliath, Diageo.
The world's second-largest distiller, with such brands as Kahlua and Beefeater, is in talks with Seagram of Canada, according to published reports. Seagram carries a portfolio of brands including Chivas Regal and Absolut.
Allied Domecq has held talks with several companies since May when Guinness PLC and Grand Metropolitan PLC disclosed their $37.5 billion merger plans. The combined company was renamed Diageo after the transaction closed a month ago.
Goldman Sachs, which is advising Allied Domecq, favors pooling the beverage businesses of Allied Domecq and Seagram into a single joint venture, the Financial Times reported Monday. The venture would best allow both companies to compete with Diageo.
No terms were discussed and no deal is imminent.
But some analysts believe a deal could be hindered by Seagram bidding for Dewar's -- the leading scotch label in the U.S. -- which Diageo is obligated to divest.
Negotiations between Allied Domecq and Seagram were first reported over the weekend by a British newspaper, the Sunday Telegraph. 
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