VAUX, the Sunderland-based beer to Swallow Hotels group, is believed to have poached Martin Grant, who heads Allied Domecq's leisure division, to be its new chief executive.

Vaux chairman Sir Paul Nicholson said last week that an appointment would be announced shortly, but he gave no indication even as to what industry the person came from.

Once the appointee was on board, Sir Paul said he would give up his executive role.

If the Grant move is confirmed, it will be read by the City as yet another blow to Allied.

The drinks, pubs and franchise ice-cream and doughnuts company is widely regarded as being vulnerable on the spirits side since the formation of Diageo, through the merger of Grand Metropolitan and Guinness last year to create the world's largest operator in

the sector.

There had been hopes Allied Domecq chairman Sir Christopher Hogg would announce some progress on joint ventures with Seagram along with the recent preliminary results, as he has consistently said that such an alliance is necessary to meet the threat posed by Diageo.

Hopes of a deal with Seagram so there could be a full-scale merger of the spirits businesses of both groups - where the Canadian company would bring in Chivas Regal as its best-selling whisky to complement Allied's Ballantine's - are waning. Increasingly, Seagram chairman Edgar Bronfman has indicated he is much more interested in growing the entertainment activities.

That is underlined by the fact that he will meet the board of Philips, which owns 75% of Polygram, on Wednesday to discuss his mooted $10bn bid for the music and film subsidiary of the Dutch giant.

Although this would be a very large deal for Seagram, it is thought it would still retain its drinks operations.

The company was earlier in talks with EMI about acquiring the music company but decided the asking price was too high.