Diageo has moved to buy Bushmills, the Co Antrim-based distillery, for almost €300 million.

Bushmills is currently owned by Pernod Ricard, and the deal is conditional on Pernod being successful in its £7.5 billion (€11.1 billion) acquisition battle for Allied Domecq.

Bushmills is the number two Irish whiskey, significantly behind Jameson, which is also owned by Pernod.

If Diageo is successful in acquiring Bushmills, it is likely to put considerable support behind developing the brand. The group does not have an Irish whiskey in its portfolio at the moment.

The agreed purchase price of about €295 million is based on 14 times the "direct brand contribution" Bushmills made to Pernod in 2004.

Diageo said last night that it expected the proposed deal to be "economic profit positive" during the fourth full year of completion using a 9 per cent weighted average cost of capital.

Paul Walsh, chief executive of Diageo, described the acquisition of Bushmills as "a particularly pleasing opportunity".

"This is one of the industry's oldest Irish whiskey brands and gives Diageo, for the first time, an important presence in this growing category," Mr Walsh said.

Diageo has also agreed with Pernod Ricard to buy most of Allied Domecq's Montana wines if the Pernod bid for Allied is successful.

The option to buy the New Zealand Montana business for about £320 million will strengthen Pernod's hand in its battle with rival Constellation Brands for Allied.

Diageo has also agreed with Pernod to to cease talks with any third party in connection with the purchase of any of Allied's brands, thus tying it to Pernod.

Mr Walsh said the Montana option gave Diageo the opportunity to establish whether or not it could repeat the growth it has seen in its existing wine business

Analysts said Pernod had made a clever move by selling off two smaller businesses to Diageo and preventing Diageo from joining any rival bidding group.

Both the Bushmills and Montana acquisitions would also be subject to regulatory clearance and would not close until late 2005 or 2006.

Bushmills draws considerable cachet from its status as the world's oldest licensed whiskey distillery.

It received its licence to distil in 1608 from James I of England and has emphasised its heritage ever since.

It has tended to concentrate on the production of single malts but has more recently moved into the liqueur market with the production of a whiskey cream liqueur for the US market.

The distillery also supplies whiskey for the St Brendan's cream liqueur brand which is owned by Kerry Group.