Word that there could be a merger between Bermuda-based rum maker Bacardi and a rival liquor company was put on the rocks yesterday.

Now it would appear - despite news reports to the contrary - that the only place that Bacardi and Allied Domecq spirits are likely to mix, any time soon, are in a glass.

In an interview published in The Daily Telegraph on Monday, Allied Domecq head Phillip Bowman indicated there was the possibility of a merger with Bacardi. Such a move was reported by Mr. Bowman as a promising way to shave millions off operating costs.

But a source close to Bacardi yesterday told The Royal Gazette there may be little truth to that report. Although Bacardi's spokesperson was not available for comment on talk of a merger either Monday or yesterday, someone close to the matter said there was constant industry chatter about rival liquor companies merging but that Bacardi did not have any deal in the offing.

In this week's Telegraph report, Mr. Bowman said the savings that would follow the two companies joining together could not be ignored, adding that a merger could generate savings of 200 million.

Although Mr. Bowman conceded that a merger of two stand-alone companies - he also did not rule out a merger with other contenders such as Brown Forman or Pernod-Ricard - would have its challenges, he maintained that the economics were compelling: "The economics of merging Allied with another major player in the industry are clearly attractive. There would, for instance, be roughly 200 million of cost savings from a deal with somebody like Bacardi and the capitalised value of that would be about 2.5 billion, so that's a fair amount for both sets of shareholders," he said.

At the same time, two other drinks giants, producers of beer and spirits respectively - Diageo and Heineken - said they may also join together.

Bacardi, a long-time Bermuda company, has recently been much in the news with speculation that it could go public in the near future.

Currently Bacardi's ownership is in the hands of some 600 family members but a majority shareholder vote in May allowed the issuance of new shares beyond the 23.5 million shares already held and several non-family directors were named.

That development was touted as a possible precursor to a public offering, although that would still require majority agreement by the drink giant's private shareholders.