Pernod Ricard of France won a hard-fought auction to acquire Vin & Sprit Group, the owner of Absolut vodka-but this morning its chief executive, Patrick Ricard, may already feel a hangover coming on.

V&S, which is owned by the Swedish government, fetched nearly $9 billion at auction, well above the $7 billion some predicted.

Pernod said that the purchase would "generate significant value creation for Pernod Ricard's shareholders," but the shareholders didn't seem to think so, sending the stock down 4.9 percent to 64.66 euros by early afternoon in Paris. Shares of Pernod Ricard have underperformed the sector this year, falling over 18 percent since the beginning of January.

Absolut will be a feather in Pernod Ricard's cap to be sure. It is the No. 1 premium vodka brand by volume and the third-largest premium liquor brand (after Diageo PLC's Smirnoff vodka and Bacardi rum). The acquisition vaults Pernod Ricard into the top global position in premium spirits and co-leadership in wines and spirits worldwide, alongside Diageo.

Premium vodka has been the fastest-growing segment of the liquor industry in recent years, and Absolut is an especially prized brand because of its strong global positioning.

And Pernod Ricard has been keen to patch the vodka-shaped hole in its brand lineup, which includes Chivas, Glenlivet, Jameson, Beefeater, Malibu, Mumm, and Perrier-Joüet.

Perhaps a little too keen. According to Pernod, the deal valued V&S at 20.8 times 2007 gross operating profit — a multiple which may represent the top of the cycle, Cantor Fitzgerald senior analyst Stephen Surpless told Reuters

In the battle for V&S, Pernod Ricard beat out Fortune Brands, which already distributes Absolut in the United States, partly by promoting the potential for its global distribution network to create cost synergies with V&S. Those savings will certainly be necessary to offset the penalty they will have to pay for breaking up the distribution agreement with Fortune Brands.

The acquisition, the latest in the consolidation trend within the liquor industry, will be watched closely by dealmakers.

Pernod Ricard said it will pay $8.9 billion in total for V&S, which also has $546.8 million of outstanding debt.

Some $19 billion in financing will be provided by a consortium of no less than six banks, including BNP Paribas, Calyon, J.P. Morgan Chase, Natixis, the Royal Bank of Scotland, and Société Générale. That sum will finance the deal as well as refinance the company's existing debt.

In addition to Absolut, the V&S acquisition also brings brands such as Cruzan Rum and Level, the No. 4 brand in the superpremium vodka category in the United States.