Diageo Plans Tequila Binge

Global spirits maker Diageo is exploring the purchase of Jose Cuervo, Mexico’s storied tequila maker, which is valued at $2.9bn-$3.4bn. So far, Cuervo has retained the advice of Barclays, while Diageo is being advised by Goldman Sachs, a person familiar with the talks says. Discussion between the companies is “complex,” the person says, since it is still unclear whether the deal will result in a complete purchase of all of Cuervo’s assets. Diageo and Jose Cuervo officials could not immediately be reached for additional comment. The merger talks have sprung from Diageo’s bid to acquire the company, leveraging an agreement between the companies to distribute Jose Cuervo internationally. Diageo officials have publicly expressed reluctance at renewing the distribution deal when it expires next year. The relationship with between Diageo and Cuervo has seen its ups and downs. Cuervo sued Diageo in the late 1990’s to take back its US distribution rights but the companies settled the dispute in the early 2000s with a new deal that now expires in 2013.