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Diageo Ends Talks About Cuervo’s Future, Will Terminate Deal
FMCG SUPPLIER NEWS
Bloomberg - Dec 11th 2012, 10:04
Diageo Plc (DGE), the world’s largest distiller, ended talks about the future of the Cuervo tequila brand with JB y Compania SA de C.V. and Lanceros S.A. de C.V. and will now work to cease the current distribution agreement.
“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,” Paul Walsh, chief executive officer of Diageo, said in a statement today. Diageo’s agreement to distribute the tequila outside of Mexico is due to expire at the end of June, 2013.
The London-based distiller had an option to buy the company because of that agreement, a person with knowledge of the matter said last year. Diageo had hired Goldman Sachs Group Inc. and HSBC Holdings Plc for advice in exploring gaining control of Jose Cuervo tequila from its family owners, the Beckmanns, people familiar with the plan have said. The brand was expected to be valued at more than $3 billion.
Diageo is seeking growth in markets outside Europe, as part of its plan to get half of its net sales from developing markets by 2015. The maker of Johnnie Walker last month bought a stake in India’s United Spirits Ltd. to gain leadership in the world’s largest whiskey-consuming nation.
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