Diageo considers Jose Cuervo move

Diageo is reportedly considering a £1.2billion bid for Jose Cuervo, the world’s biggest Tequila brand, amid speculation it is about to be put up for sale by its owners the Beckmann family.

It is believed the Beckmanns have talked to Barclays about appointing the bank to oversee a potential sale in a move that would be expected to spark a fierce bidding battle.

Diageo would seemingly be in pole position should such as sale be sanctioned, seeing that it already owns the international distribution rights to the brand.

However, it would be expected to face competition from rivals including Bacardi, Pernod Ricard and US spirits giant Brown-Forman, the maker of Jack Daniels.

It is also worth considering that Diageo is looking at acquiring Stock Spirits and has been linked with a move for, if not all, then some of the Beam Global portfolio, owned by Fortune Brands.

The Beckmanns are thought to have been prompted to sell by the expected sale of Fortune Brands in America, which owns Sauza Tequila.

A sale of Sauza might lower the asking price for Jose Cuervo, but competition authorities would doubtless have something to say should Diageo move for both brands.

Alan Lodge, 23.03.2011