Diageo has agreed with Jose Cuervo to swap whiskey brand Bushmills in exchange for Don Julio Tequila, in addition to the early termination of Jose Cuervo’s production and distribution agreement for Smirnoff in Mexico.
The transaction will result in a net payment of $408m to Diageo upon completion, which is expected in early 2015 subject to certain approvals.
Jose Cuervo is owned by the Mexican-based Beckmann family and their distribution arm, Proximo, controls a number of other high profile brands. Chief executive Juan Domingo Beckmann described the acquisition as the “Most important purchase made by Cuervo in its entire history”.
In 2012, Diageo launched a failed attempt to buy Jose Cuervo outright which resulted in the Guinness owner settling on a shareholding stake.
Mr. Beckmann confirmed that no jobs would be lost as a result of the Bushmills acquisition. Bushmills lays claim to being the oldest distillery in the world, dating back to the 17th century. Prior to being bought by Diageo in 2005, it was previously owned by Pernod Ricard.
Smirnoff volume and net sales in Mexico in the year ended 30 June 2014 were 285,000 cases and £9m respectively. Bushmills volume and net sales in the same period were 800,000 cases and £57m. Tequila Don Julio had volume and net sales of 590,000 cases and £105m, of which Diageo accounted for 345,000 cases and £75m net sales, in the year ended 30 June 2014.