After negotiating for a year, Diageo has withdrawn from talks with Cuervo which would see Diageo having a equity deal with the family-owned brand. Diageo chief executive Paul Walsh had been talking with the multi-billionaire Beckmann family – owner of the Mexican spirits group – but could not agree on price. This will mean that Diageo’s distribution agreement with Cuervo will now expire in June 2013. In a statement Walsh said: “We believe the future of the brand would be delivered by aligning ownership of the brand with its route to market. However 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.”
Diageo will now have a hole in its Tequila portfolio, while Cuervo is left without a distributor. It is possible that Pernod could now step in.
