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Diageo Reportedly Poised To Acquire Stake In Cuervo

May 16, 2012

Diageo could take a 20%-30% stake in Jose Cuervo in the coming weeks, Reuters reports. “A deal with Diageo taking a minority stake in Cuervo for cash or shares seems the most likely outcome, with an agreement expected in the next six weeks,” a source told Reuters. Such a deal is expected to allow Diageo to acquire a majority stake in Cuervo later, corresponding to Diageo CEO Paul Walsh’s stated goal of acquiring control or a route to control of the brand.

Valued at around $3 billion but beset by a recent influx of accessibly priced 100%-agave Tequila competitors in the U.S., Cuervo saw sales slide 11% in North America in the six months through December. It’s thought that Diageo would be more inclined to increase resources behind the brand once it gains an equity stake.

 

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