Don’t adjust your set. George Clooney has not been cast in a Hollywood reboot of HBO’s Entourage, he has, in real life, landed a billion dollar deal to sell ‘his’ tequila company.
Diageo plc (LON:DGE), the London-listed owner of alcohol brands such as Jonny Walker, Smirnoff and Guinness, revealed after Wednesday's market close that it had agreed to purchase the Casamigos tequila brand. It will pay an initial US$700mln, with a further US$300mln subject to the brand’s sales performance over the next ten years.
Clooney was one of three headline founders of Casamigos, alongside Cindy Crawford's husband and entrepreneur Rande Gerber and Mike Meldman.
An ‘authentic’ award-winning tequila brand
"Since inception Casamigos has received numerous awards and accolades from tequila experts, taste makers and influencers across the US," said Diageo in a regulatory statement released after the London close.
It added that Casamigos has an authentic brand with a smooth and accessible taste profile and growth reached 120,000 cases in 2016, primarily in the US, and a CAGR (compound annual growth rate) of 54% in the last two years. The brand is on track to reach over 170,000 cases by the end of 2017.
Clooney to stay on
CNBC quoted Clooney as saying: "If you asked us four years ago if we had a billion dollar company, I don't think we would have said yes
"This reflects Diageo's belief in our company and our belief in Diageo. But we're not going anywhere. We'll still be very much a part of Casamigos. Starting with a shot tonight. Maybe two."
The transaction, funded through cash and debt, is expected to close in the second half of calendar 2017.
Diageo expects it to be EPS (earnings per share) neutral for the first three years and accretive thereafter.
"We expect the acquisition will be economic profit positive in the fourth full fiscal year post-completion," it added.