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Diageo 'to bid for Jose Cuervo'

Insiders say Diageo is preparing a deal to purchase a minority stake in Jose Cuervo.

29 March 2012

Diageo is set to purchase a stake in the Jose Cuervo tequila brand, insiders have claimed.

Reuters reports people familiar with the deal expect Diageo to take a small stake in Jose Cuervo, which is valued at over $3 billion (£1.9 million).

"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," one anonymous source was quoted by the news agency as saying.

Diageo may be liaising with merger and acquisition consultants over a deal, which is expected to be completed as soon as early summer.

Paul Walsh, Diageo chief executive, has previously confirmed he would like to take control of Jose Cuervo.

Diageo already acts as a distributor for Jose Cuervo and the two parties have a long-term contract that is due to come to an end in June 2013.

Mr Walsh is said to be keen to purchase a stake before the agreement finishes, having said renewing the distribution arrangement is not an option as Diageo does not profit enough.

Diageo's existing portfolio of brands performed well in the most recent Impact Databank spirit rankings, with the firm, which owns labels such as Smirnoff and Johnnie Walker, having more brands in the top 20 than any other manufacturer.

Posted by David Gleck

Source: Reuters, March 29th

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