March 14, 2007 / 3:59 PM / 12 years ago

Diageo says would look at Absolut if up for sale

By Ian MacKenzie

EDINBURGH, March 14 (Reuters) - Drinks giant Diageo Plc (DGE.L) would look at the acquisition of Sweden’s state-owned Absolut vodka business, which the government wants to sell, Chief Executive Paul Walsh said on Wednesday.

The centre-right Swedish government has pledged to sell off Absolut’s parent, the 90-year-old state-owned Vin & Sprit, and is looking at all options on how to conduct the sale, which analysts estimate may fetch around $5-6 billion.

Asked during a telephone interview with Reuters about Diageo’s attitude towards Absolut, he said, “We will be looking at it as we look at all opportunities of that nature”.

London-based Diageo, the world’s largest alcoholic drinks company, currently owns Smirnoff, the world’s top selling vodka, while Absolut is in second place.

Concerning possible competition problems if Diageo was to buy Absolut, Walsh said, “We believe that in any debate with competition authorities, solutions can be put forward. So with creative thinking solutions can become apparent”.

Walsh was reluctant to discuss potential acquisitions, but noted the company had spent 1 billion pounds ($1.9 billion) on acquisitions in the past year, including Bushmills Irish whiskey, Ursus vodka, Californian wine group Chalone and it also took a stake in a Chinese spirits maker in December.

“These are in the territory of what I refer to as bolt-on acquisitions ... but nonetheless it’s a track record we intend to build on,” he said.

Last week, a Swedish government spokesman said France’s Pernod Ricard (PERP.PA), privately-owned Bacardi and U.S. Jim Beam bourbon maker Fortune Brands FO.N have all expressed an interest in buying Vin & Sprit.

And Swedish Financial Markets Minister Mats Odell said on Tuesday he expects parliament to give its blessing in May to the sale.

Some analysts see Fortune, which bought Britain’s Allied Domecq jointly with Pernod in 2005, as an early favourite to buy Absolut as it already distributes the brand in the United States, which accounts for around half of Absolut’s volume.

Pernod’s Chairman Patrick Ricard said last week his group could afford to buy both Absolut and also Russian vodka brand Stolichnaya if necessary, but only needed one of them.

Among the others, Bacardi has been reported in the media to be interested in buying Absolut, while Fortune is more cautious.

“In the spirits category we are interested in acquiring, under the right set of circumstances, but we are not commenting on Absolut,” Fortune Chief Financial Officer Craig Omtvedt told Reuters last week.

($1=.5197 Pound)

((Writing by David Jones, editing by Greg Mahlich; Reuters Messaging: david.jones.reuters.com@reuters.net; tel +44 20 7542 7972)) Keywords: DIAGEO ABSOLUT/

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