The world's biggest drinks group Diageo has agreed to sell its Malibu coconut rum to rival Allied Domecq for £560 million sterling in a deal forced on Diageo by competition authorities.
The price fell short of the £600-650 million expected by investors, but the two bitter rivals also agreed to end a legal row over Diageo's Captain Morgan rum brand in a side deal that may have persuaded Diageo to take a lower price.
Diageo was forced into a sale of Malibu, a lower-strength spirit popular in the United States, especially with women, as a condition of receiving regulatory approval for its part purchase of the Seagram drinks empire from Vivendi Universal.
Diageo and France's Pernod Ricard agreed to buy the drinks empire for $8.15 billion about a year ago, but the US Federal Trade Commission (FTC) opposed the deal. The FTC said Diageo would add Captain Morgan to its own Malibu, creating competitive concern in the US rum market.
In the year to end-June 2001, Malibu had total sales of 2.3 million cases. After marketing costs, it contributed 43.5 million pounds to Diageo's group profit.