By Andrew Starke
Diageo is believed to be in exclusive talks to buy Jose Cuervo, the world’s largest tequila brand, in a deal that could be worth more than US$2 billion.
The global spirits giant distributes Jose Cuervo in most parts of the world, including Australia, and has first option to acquire the family-owned company.
While Diageo has so far declined to comment, reports in the US suggested the Beckmann family, who were originally granted land in Mexico to start a blue agave farm in 1758, were pushing for a sale.
Liquor companies Pernod Ricard and Brown-Forman are believed to be watching developments with interest.
The tequila category in the important US market has been languishing since early 2009 at the global financial crisis saw a decline in bar business and several new entrants added to the crowd of brands competing for market share.
While Diageo’s share price initially dropped on the news, analysts at Espirito Santo were positive on any potential deal, telling the UK’s The Guardian newspaper that $2 billion would be a fair price for Jose Cuervo.
In related news, Diageo has announced a change to the current configuration of its International region.
From July 1 this will be divided onto two autonomous regions; Diageo Latin America and Caribbean and Diageo Africa.