US competition authorities have lifted a block on an $8.15bn (�5.59bn) sale of Seagram's wines and spirits empire to Britain's Diageo and France's Pernod Ricard.

The antitrust watchdog cleared the acquisition after Diageo agreed to sell its Malibu rum brand.

Under the proposed deal, Diageo would buy 61% of Seagram's alcohol assets, including Myers rums, 7 Crown American whiskey and Sterling Vineyards wines.

Diageo also hopes to claim Captain Morgan, though the outcome here is extremely uncertain because the ownership of the rum brand has been challenged.

Allied Domecq, which is second to Diageo in the world spirits' stakes, has argued that it has already secured the rights to the brand through an alliance with Puerto Rican manufacturer Destileria Serralles.

Pernod would buy the remainder of the Seagram business, including Chivas Regal, Glen Grant, Royal Salute and Glenlivet whiskies, Seagram's Extra Dry gin and Martell cognac, to add to its Wild Turkey bourbon and Havana Club rum.

Market dominance

In October, the US Federal Trade Commission (FTC) had blocked the takeover of Seagram's drinks arm because it feared it could result in duopoly market dominance of the rum market, where the independent brand Bacardi dominate with a 51% market share.

Seagram's rum brands, including Captain Morgan, command a 20% share while Malibu's share is 5%.

The decision was seen as a blow to Diageo, which was harbouring high hopes of extending its dominance of the global spirits market.

But analysts have said for weeks that selling the brand would make sense for Diageo.

Not least since an alternative would be to hive off Seagram's Captain Morgan rum label, Diageo's main object in going after the Seagram portfolio.

Malibu value

The Malibu coconut rum brand is believed to be worth between $900m and $1.1bn, analysts have estimated.

The Federal Trade Commission (FTC) was concerned that the deal would reduce competition in the US rum market and leading to higher prices for consumers.

Potential buyers for Malibu are tipped to include Diageo's partner in the Seagram acquisition, Pernod itself.

Alternatively, Allied Domecq, with less than half Diageo's market share, could be a likely buyer.

Vivendi Universal

Seagram's current owner, Vivendi Universal of France will welcome the fresh cash since it comes just two days after it took control of the entertainment assets of USA Networks in a $10.3bn deal.

USA Networks will be combined with Universal Studios to create Vivendi Universal Entertainment, the company said earlier this week.