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Diageo “closing in on Cuervo”?

Diageo is closing in on an agreement to buy or increase its stake in Jose Cuervo Tequila, according to reports – with some suggesting a deal could be announced as early as this week.

Jose Cuervo Tequila may soon be owned by DiageoHowever, other sources suggest that ongoing negotiations with Jose Cuervo owners the Beckmann family are far from over and are likely to continue for some weeks, if not months, to come.

A raft of newspaper reports in the UK have rekindled speculation over Cuervo, the world’s leading Tequila brand, which is owned by the Beckmanns but distributed in most markets by Diageo.

That distribution agreement expires in June 2013, with Diageo CEO Paul Walsh making no secret of the fact that he wants a very different agreement in future – probably involving Diageo owning the brand outright or taking a large stake in it.

Meanwhile, there are also renewed reports that Diageo is in talks with Vijay Mallya’s UB Group about buying a stake in United Spirits, India’s leading spirits business.

The two companies have held similar abortive talks in the past, but Mallya is believed to need cash to pay off debts associated with his troubled Kingfisher Airlines business, while Diageo is keen to raise its profile in India.

Diageo announces its preliminary full-year results for the 12 months to 30 June 2012 on Thursday morning.

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