Pernod wins Absolut vodka

By James Regan and Niklas Pollard

PARIS/STOCKHOLM (Reuters) - France's Pernod Ricard (PERP.PA: Quote, Profile, Research) has won the battle to buy the maker of Absolut vodka, in a costly 5.63 billion euro ($8.9 billion) deal that brings it nearly level in sales with global spirits leader Diageo (DGE.L: Quote, Profile, Research).

Pernod shares stumbled as the market baulked at the price, which was far higher than the $6-7 billion estimated by the market even before the worst of the past few weeks' financial turmoil, and at the hefty debt needed for the deal.

Pernod beat the favorite, Jim Beam bourbon maker Fortune Brands (FO.N: Quote, Profile, Research), to win control of Sweden's Vin & Sprit VSG.UL, owner of the fast-growing Absolut brand, and gain a bigger presence in the U.S.

Diageo had pulled out of the auction in February.

Analysts at HSBC called the deal a "master stroke", but said the high cost proved there were no cheap opportunities left in the rapidly consolidating drinks sector.

Pernod shares were down 4.5 percent at 65.05 euros at 11:25 a.m. EDT. The stock has fallen 18 percent this year, underperforming the food and beverage sector .SX3P by almost 8 percent.

"The combination of a full price and the amount of debt to be raised definitely seems to have unnerved certain investors," said Stephen Surpless, senior analyst at Cantor Fitzgerald.

"While vodka has been a growth market over the past few years, this may be the top of the cycle in terms of multiples paid," he added.