Diageo, the world's biggest drinks company, has called in long-standing financial adviser UBS to work on a deal with Pernod Ricard that would end its involvement in a £7.5bn (€11.2bn) bidding battle for rival Allied Domecq.

UBS, which has worked with Diageo on all of its big merger and acquisition deals, is advising the company on the purchase of two businesses from Pernod Ricard, the French drinks maker seeking to take over Allied Domecq.