DIAGEO IS edging towards a deal with the owner of Jose Cuervo tequila which could see the drinks group take a minority stake in the $3 billion-valued number one tequila brand, people familiar with the situation said.
Diageo chief executive Paul Walsh has said he wants control, or a route to control, of a brand owned by the secretive Beckmann family, and a deal for a small stake is anticipated and could be concluded by the early summer, they added.
The maker of Guinness, Smirnoff vodka and Captain Morgan rum already distributes Cuervo in most big export markets outside Mexico, and has been in talks with the Beckmanns about the brand’s future when a long-term distribution contract ends in June 2013.
“The most likely scenario is that Diageo takes a minority stake and then looks to increase its influence over time and gain control of this valuable brand,” said one banking source with knowledge of the situation yesterday.
Mr Walsh has made clear that a renewal of the current distribution contract is not an option as the group does not make enough profit from the brand. – (Reuters)
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