There are only two serious contenders for Seagram's drinks portfolio: Allied Domecq and Diageo, which recently teamed up with Pernod to launch a joint bid. "Allied can't really afford to buy it," one analyst observed. "But it can't afford not to either." Allied shares slipped following the announcement of the Anglo-French bid as investors worried the group might be forced to overpay. The beauty of Diageo's partnership with Pernod is that it enables the UK firm to overcome regulatory hurdles and share out Seagram's spoils. The two could cherrypick the brands on offer. Pernod's primary interest is in Scotch whisky and Chivas Regal, while Diageo is after Crown Royal and Captain Morgan rum. While a bid from a Seagram management team in alliance with the Bronfman family, which has a 24% stake in Seagram, cannot be discounted, analysts doubt whether the group could raise the necessary cash. Vin & Spirit, the Swedish producer of Absolut vodka has vigorously denied reports it backs a Bronfman bid. In a round robin' letter to potential buyers this week, V&S offered itself as a partner in exchange for a stake in the company or a liquor brand. And given V&S could revoke its distribution agreement with Seagram, the Swedish firm clearly has some leverage. Absolut accounts for a third of Seagram's profits. If Allied gets its hands on Seagram it could rival Diageo at the top of the world's spirits industry. But a bidding war could put the biggest prize in the global spirits industry just beyond its reach. Should the price go much above £5bn, said one analyst, "Allied could be in serious trouble". {{NEWS }}