Diageo gets go-ahead for Seagram deal

Diageo has gained approval for its £5.7bn purchase of Seagram's wine and spirits business.

The US Federal Trade Commission has cleared the deal, which will see Diageo acquire Captain Morgan rum and other brands.

But the commission has told Diageo it must sell off Malibu rum amid concerns that its ownership of two key brands would adversely affect US competition.

Diageo, which owns Smirnoff and Guinness, must sell Malibu within six months of the deal's close and is not allowed to integrate Seagram's assets until then.

The group is buying the business with French rival Pernod Ricard and has already agreed to sell two other businesses - Gibson's Finest Canadian whisky and Four Roses bourbon - to satisfy Canadian and EU authorities respectively.

Chief executive Paul Walsh says: "Through this acquisition, Diageo will acquire a series of exciting spirits businesses and a very significant extension to our wine business."

The group says that in the four months to October 31, volume and net sales grew at comparable rates to those achieved last year.

Smirnoff was one of its strongest offerings, following buoyant sales in the ready-to-drink market with Smirnoff Ice.

Diageo says Guinness also had a healthy few months after solid performances in Africa and the launch of the draught stout in a bottle in the US.

The group is currently seeking to quit the food industry and last month completed the £7.2bn sale of its Pillsbury food business to General Mills of the US.

It also aims to dispose of fast food chain Burger King.