Diageo ends Cuervo talks

11th December, 2012 by Andy Young

Diageo has announced that it is ending its discussions with the Beckmann family, about acquiring Cuervo Tequila.

As the deal to buy Cuervo has fallen through Diageo has also said it will end it 26-year deal to distribute the Tequila. As reported in the drinks business in August, Diageo’s chief executive Paul Walsh had said that he did not want to simply renew the global distribution deal for José Cuervo, which expires next year.

Talks between Diageo and Cuervo’s family owners, the Beckmanns, have been going on for over a year, and the brand was expected to be valued at more than US$3billion.

In confirming that the talks had ended Walsh said: “Diageo has had a long and successful relationship with the Cuervo brand and we are proud of what we have achieved for the brand as its distributor over many years.

“We believe that the future of the brand would be best delivered by aligning ownership of the brand with its route to market and I have no doubt that Diageo has the best route to market for this brand.

“However it has not been possible to agree a transaction which delivers value for Diageo’s shareholders and therefore by mutual agreement, we have terminated our discussions.”

With the Diageo deal falling through the question now remains as who will acquire Cuervo. In August db reported that Pernod Ricard has said it does not wish to make a “transformational” acquisition and it prefers to own brands rather than distribute them. As Beam Global owns the number two Tequila Suaza and Bacardi has a stake in Patrón, the door could be open for the US company Constellation Brands to start talks with the Beckmann family.

The Cuervo news comes the day after it was reported that Diageo is considering an offer to buy Jim Beam whiskey.

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