Diageo sells Malibu to Allied Domecq

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Diageo has cleared the way for final approval of its $8.15bn acquisition of Seagram drinks portfolio by selling its Malibu brand to Allied Domecq.

Allied Domecq will pay £560m ($800m) for Malibu. It beat off competition from Pernod Ricard and Fortune Brands. Diageo will also transfer the Mumm Cuvée Napa sparkling wine business to Allied Domecq for £27.5m ($39m). Allied Domecq already owns the Mumm champagne business.

Late last year, the US Federal Trade Commission gave Diageo six months to dispose of Malibu as a condition for approval of the Seagram drinks deal. The UK's Allied Domecq won Malibu in an auction that pitted it against Pernod Ricard of France and Fortune Brands of the US.

TRW understands that Puerto Rican distiller Serralles has also agreed to withdraw its case on behalf of Allied Domecq, claiming first refusal of the brand following the Seagram sale. In return, Diageo has agreed a supply contract between its Joseph E Seagram subsidiary and Serralles, according to reports.