The liquor UK company Diageo is set to strengthen its participation in the fast growing tequila category, as well as expanding the brand internationally.
“We are extremely excited to team up with one of the largest, most respected spirits companies in the world,” said Casamigos Tequila co-founder, Rande Gerber.
Casamigos was created in 2013 by the founders wherein the essence of the brand is “made by friends for friends”, which is reflected on its name that translates to “house of friends”. Since inception, it has received numerous awards and accolades from tequila experts, taste makers and influencers across the US.
“We are delighted to announce this transaction today 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,” said Ivan Menezes, chief executive of Diageo.
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.
“I am excited by the opportunity to bring Casamigos into the Diageo portfolio which allows us to further penetrate this exciting and high growth category. We believe Casamigos will play a complementary role alongside Tequila Don Julio. We look forward to partnering with [Clooney, Gerber, Meldman] to realise the full potential of the brand,” said Deirdre Mahlan, president Diageo North America.
The tequila brand bears authentic brand identity with a smooth and accessible taste profile. Its quality and uniqueness has delivered impressive growth, reaching 120k cases in 2016, primarily in the US, and a CAGR of 54 per cent in the last two years. The brand is on track to reach over 170k cases by the end of 2017.
“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,” Mahlan commented.
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 as well as the acquisition will be economic profit positive in the fourth full fiscal year post-completion. The acquisition will be funded through existing cash resources and debt.