Diageo (DGE.L), the world's biggest spirits maker, is in talks with the owners of Jose Cuervo tequila over extending a distribution deal or buying the business outright, sources familiar with the matter told Reuters. "Diageo are talking to Jose Cuervo about the future shape of the relationship which has a number of potential scenarios," one of the sources said on Wednesday. Banking sources said an agreement on either an extension to the distribution deal or an acquisition is likely. "I would be amazed if the two don't come to an agreement. Conversations are ongoing," said a banker familiar with the sector, adding that a deal was possible before the end of the year but was not on the immediate horizon. Diageo currently holds international distribution rights to Jose Cuervo, the world's best-selling tequila, in a deal due to expire in 2013. The business could fetch $2 billion plus if the Beckmann family decides to sell the brand. Analysts believe the Beckmanns may be assessing a sale ahead of the break up of Fortune Brands (FO.N), which will put Sauza, the world's second-biggest tequila, on the market.
Fortune Brands, Inc. is a holding company with operating companies engaged in the manufacture and sale products, such as distilled spirits, home and security products, and golf products. Shares of FO remained unchanged at $62.71. In the past year, the shares have traded as low as $37.05 and as high as $65.48. On average, 791256 shares of FO exchange hands on a given day and today's volume is recorded at 0.
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