Diageo readies $3bn purchase of Jose Cuervo

DIAGEO’S long-awaited $3bn (£1.9bn) takeover of Mexican tequila firm Jose Cuervo could be announced this week when the drinks giant reports its annual earnings on Thursday.

The deal, which has been in the works for over a year, would add the world’s most popular tequila to Diageo’s brands, which include Johnnie Walker, Guinness and Smirnoff. Jose Cuervo controls around 20 per cent of the global tequila market.

Chief executive Paul Walsh has closed a number of recent deals in emerging markets, including the £300m buyout of Ypióca, which produces Brazilian spirit cachaça.

Although negotiations with Jose Cuervo could last several more weeks, the deal’s progress is expected to be a central talking point during Thursday’s announcent. Walsh said in March that Diageo will not renew the US distribution agreement with Jose Cuervo that expires next year, and that he is looking to take control of the Mexican firm, owned by Cuervo family heirs the Beckmann family.

Analysts are predicting an eight per cent rise in net sales to £10.75bn and a pre-tax profit of £2.95bn.