Product details

In August 2000, Vivendi, the French media company announced the purchase of the Canadian entertainment and spirits giant Universal. The deal, made for the entertainment arm of the company, and the drinks arm of Universal known as Seagram''s, was to reduce Vivendi''s debt. This presented an opportunity for all of Seagram''s rivals as Seagram''s owned some of the biggest brands in the industry such as Chivas Regal Scotch and Captain Morgan Rum. Allied Domecq, the second biggest company within the industry would look at auction bidding for the Seagram portfolio as a way of gaining some ground on the market leader, Diageo. It would also put a greater distance in terms of market share between themselves and the third largest company Pernod-Ricard. The issues to analyse are: financial impact; implications of antitrust laws; secondary brands included in the portfolio; whether a bid was within the interests of the shareholder; and the strategic positioning. The case should be used as an example of how fast, large-scale mergers and acquisition decisions (here: to bid or not to bid) are made and the underlying opportunities and risks.