Allied Domecq's chances of securing Seagram's $7bn drinks business has received a boost with the news that Absolut Vodka's Swedish owners favour it over the rival joint Diageo and Pernod-Ricard team.

But John Jay, The Sunday Times' business editor promises "a keen scrap" with Allied Domecq which also wants the drinks assets. He says

Diageo will be "virtually unassailable," in its core area if its joint bid with Pernod-Ricard succeeds.

A sale memorandum will be sent out soon. This will include, among other things,

the change of control issues relating to Absolut Vodka's distributorship.

The Sunday Telegraph's City Editor Neil Bennett asks why Diageo and Pernod-Ricard are being so secretive about how they plan to divide up the business. He believes the two would split the business more or less 50/50. The Sunday Business quotes industry sources who say the financing of the deal is likely to be split 60-40 with Diageo paying the largest share of about $4bn. But it says other drinks companies could enter the fray such as Bacardi which is known to be working on a bid possibly with another drinks company or private equity group. US group Brown-Forman, which owns Jack Daniels, is also said to be interested.

The Observer asks what the Diageo and Pernod Ricard announcement will mean for Diageo's Guinness brand which has not been able to hold market share in Ireland. Diageo is looking to move the Dundalk plant to Northern Ireland as it reviews all its operations in the Republic.

The Sunday Times 20/08/00 page 2 (Business - Agenda)

Financial Mail On Sunday 20/08/00 page 13 (the markets)

The Sunday Telegraph 20/08/00 page 3 (Business - City Editor's Comment)

The Observer 20/08/00 page 3 (Business), page 6 (Business - Throg Street)

Sunday Business 20/08/00 page 1