From its headquarters in Bermuda, Bacardi Ltd. yesterday announced the purchase of the Dewar's Scotch whisky and Bombay gin brands for US $1.93 billion.

"This compelling transaction expands Bacardi Ltd.'s global reach and will help lead us into the next centruy as one of the world's leading spirits companies,'' Bacardi's president and chief executive officer George (Chip) Reid, Jr. said.

The company is purchasing the brands from Diageo Plc and will also acquire four distilleries -- Aberfeldy, Aultmore, Craigellachie and Royal Brackla.

The move is part of Mr. Reid's plan to reposition Bacardi at a time when liquor sales and profits have levelled out in established markets.

The Bacardi family appointed the former Washington lawyer as top executive a year ago with the mandate to boost the fortunes of the company.

Rum accounts for about 60 percent of Bacardi's estimated $2.5 billion in worldwide sales. The other 40 percent is earned from products -- mainly vermouth -- Bacardi acquired when it bought Martini & Rossi in 1993.

The $2 billion acquisition doubled Bacardi's size and boosted it into the fifth largest distilled spirits company in the world.

Mr. Reid was instrumental in helping the family make the Martini acquisition.

"In an industry that is consolidating rapidly to a few, very powerful players, it became clear to us that Bacardi had a unique opportunity to acquire two world class brands,'' he stated in a press release. "As Bacardi's second major acquisition in less than five years, it demonstrates our ambition to remain a major player in the spirits industry.'' Bacardi executive vice president, Barry Kabalkin, said the Dewar's acquisition provides the company with a foothold in the Scotch category, which he called "one of the most attractive categories in the distilled spirits world.'' Bacardi Ltd. on Pitts Bay Rd. is currently expanding its offices to accommodate all the staff it hired when Mr. Reid made Bermuda its worldwide headquarters.

The company has had a presence in Bermuda since 1965 when it set up Bacardi International Ltd. as an operating subsidiary to co-ordinate product distribution among the company's 40 factories worldwide. Bermuda has been the legal domicile for the company's holding company, Bacardi Ltd., which was registered here in 1992.

Previously the company did not have a centralised management group. Bacardi's operations were co-ordinated by the regional offices in Miami, Mexico City, Amsterdam and Hong Kong. Manuel Jorge Cutillas, Mr. Reid's predecessor, ran the company from his base in Nassau.

Mr. Reid told The Royal Gazette last October he hopes to expand Bacardi's sales into emerging markets, all co-ordinated from Bermuda.

Bacardi has annual sales of about $2.5 billion and is the fourth largest distiller in the world.

Diageo, the world's largest spirits company, said it would receive $1.9 billion from Bacardi. It said the sale will result in a profit of $774 million after costs and taxes.

"It was a much higher price than we thought it was going for. We did not have in such high profit numbers for the brands,'' said Merrill Lynch & Co. Inc.

drinks industry analyst John Beaumont.

Merrill Lynch based its values on a forecast annual profit for Dewar's of about $93 million to $101 million and profits of about $17 million for the Bombay Sapphire and Bombay Original gin brands.

The three brands turned in a combined $160 million in profits in 1997.

Dewar's, which sells about 2.7 million 12-bottle cases a year, is the best-selling Scotch in the United States, while Bombay Sapphire premium gin is one of Diageo's fastest-growing brands.

The sale was required by the Federal Trade Commission as a condition of last year's merger between Grand Metropolitan and Guinness to form Diageo. The company announced an auction for the brands about three months ago and was inundated with offers, fielding about 20 bids for Dewar's and 30 for the Bombay brands.

"The fact they have got rid of both brands to one buyer makes it look cleaner and it's well inside the time frame set by the US regulator,'' said SocGen analyst Nick Lyall.

The Federal Trade Commission insisted on the disposals taking place by June 8.

Diageo and investment bank Credit Suisse First Boston whittled down the offers in the final weeks to about five potential contenders after Allied Domecq Plc, a rival British drinks company, withdrew.

Other reported bidders included Canada's Seagram Co. Ltd, Brown-Forman Corp.

and France's Pernod Ricard SA, as well as two unidentified financial buyers.

The sale includes a 15-year supply blending and storage arrangement for scotch whisky and the acquisition by Bacardi of four Diageo distilleries.

The 49 employees at the four Scottish distilleries are expected to transfer to Bacardi.

Diageo also agreed to continue bottling Dewar's for Bacardi for up to two years. Bacardi already owns a bottling plant in Glasgow, Scotland, that produces William Lawson Scotch whisky.

SPIRITED MOVE -- George (Chip) Reid says Bacardi's acquisition of Diageo Plc will help lead the company into the next century.