FDBusiness.com

Diageo has agreed to acquire Casamigos, the fastest growing super-premium tequila brand in the US. The deal provides an opportunity for Diageo to strengthen its participation in the fast growing tequila category, as well as expand the brand internationally.

The transaction values Casamigos at up to $1 billion, with initial consideration set at $700 million and a further potential $300 million based on a performance linked earn-out over 10 years, reflecting the brand’s exceptional growth trajectory and upside potential.

Casamigos was created in 2013 by founders Rande Gerber, George Clooney and Mike Meldman. The essence of the brand, ‘made by friends for friends’, is reflected in the name, Casamigos or ‘house of friends’. Since inception Casamigos has received numerous awards and accolades from tequila experts, taste makers and influencers across the US. Casamigos has an authentic brand identity with a smooth and accessible taste profile. The brand’s quality and uniqueness has delivered impressive growth, reaching 120,000 cases in 2016, primarily in the US, and a CAGR of 54% in the last two years. The brand is on track to reach over 170,000 cases by the end of 2017.

The transaction is expected to close in the second half of calendar 2017, subject to regulatory clearances. Diageo expects the transaction will be EPS neutral for the first three years and accretive thereafter. The acquisition will be funded through existing cash resources and debt.

Ivan Menezes, chief executive of Diageo, comments: “We are delighted to announce this transaction to extend our participation in the tequila category. It supports our strategy to focus on the high growth super-premium and above segments of the category. With the global strength of Diageo we expect to expand the reach of Casamigos to markets beyond the US to capitalise on the significant international potential of the brand. We look forward to building on the remarkable success of Casamigos to date.”

“We are extremely excited to team up with one of the largest, most respected spirits companies in the world,” says Casamigos Tequila Co-founder, Rande Gerber. “What started from a friendship and an idea to create the best tasting, smoothest tequila as our own house tequila to drink and share with friends, has quickly turned into the fastest growing super-premium tequila. Casamigos has always been brought to you by those who drink it and we look forward to continuing that, working alongside the expertise and global reach of Diageo. Now even more people will be able to enjoy and experience our love and passion for Casamigos.”