and spirits empire looks like the favourite to clinch a $7 billion-plus deal as other bidders blow cold or struggle with financing, industry sources said on Friday.

The bid from Britain's Diageo and France's Pernod-Ricard appears to have moved into the driving seat as Allied Domecq turns cautious and Bacardi and Brown-Forman talk with their bankers.

"Diageo and Pernod have immediate cash which must be very appealing to Vivendi, while Allied drags its feet and Bacardi/Brown-Forman struggles for finance,'' said one industry source close to the auction process.

The Seagram business, the world's third-largest spirits empire after Diageo and Allied, was put on the auction block as part of the media merger between Seagram and France's Vivendi and has attracted three main bidders.

Final bids for the Chivas Regal Scotch whisky and Captain Morgan rum business are due today, and the winner is expected to be anounced by auction organiser US investment bank Morgan Stanley before Christmas.

Diageo and Pernod confirmed their partnership earlier this week, and both are keen to expand their spirits interests by clinching this "once in a lifetime'' deal.

Diageo's new chief executive Paul Walsh wants to expand its core spirits and Guinness beer side after agreeing this year to float the Burger King fast-food business and sell off the Pillsbury US food company to General Mills.

"The Diageo-Pernod bid has been carefully thought out and their policy to divide up the brands could avoid anti-trust problems and hence speed up the process and the cash for Vivendi,'' said one banking source.

Allied, which was the early favourite for Seagram's drinks, having nearly formed a joint venture with it two years ago, appeared to blow cold by saying the decision of whether to bid would be made "nearer the time'' and it would not be rushed now it had a vodka and rum brand under its control.

Allied chief executive Philip Bowman has stressed he is not willing to overpay for the Seagram business, and his action to pick up the US distribution rights to Stolichnaya vodka and try to secure ownership of Seagram's Captain Morgan has prompted speculation Allied may pull out of the auction process.

The third bidder, Bacardi/Brown-Forman, is believed to have joined in with Sweden's Absolut vodka owner Vin & Sprit, which agreed at a board meeting last week to enter the bidding process to try and expand its spirits portfolio ahead of a possible flotation of the Swedish government-controlled group.

The Bacardi/Brown-Forman camp is believed to have got Vin & Sprit on its side to try to ensure that they can pick up the distribution rights outside Sweden for Absolut, the world's top-selling premium vodka.

But Bacardi has heavy debts since buying Dewar's Scotch from Diageo and limited finance after ruling out a flotation earlier this year, while Brown-Forman, seen as a one-product company -- Jack Daniel's -- in the industry, is over 70-percent controlled by the Brown family and may have difficulty in raising cash.