Diageo Tequila deal could be sealed this week

Diageo is close to acquiring Jose Cuervo for an estimated $3bn (£1.9bn) in cash and shares, according to reports in The Sunday Times and The Telegraph

Talks between Diageo and the owners of the world’s largest-selling Tequila brand have been ongoing for several months, with Diageo engaging Goldman Sachs and HSBC to work on negotiations as reported earlier this year.

The drinks giant’s chief executive, Paul Walsh, has publicly expressed his desire for greater control of the brand, which Diageo already distributes in the US – an arrangement due to expire in a year’s time.

An announcement of the acquisition may be made as early as this Thursday when Diageo is due to post its annual results, both newspapers said. But given the complexity and the protracted negotiations, observers believe talks are more likely to continue into the autumn.

Diageo is expected to announce strong growth for 2012. If the Cuervo deal goes ahead, it will the latest in a string of bold spirit purchases for the company, which have included £300m for Ypioca cachaça and the £1.3bn payout for Turkish raki brand Mey Içki in the past 18 months.