Diageo share price: Group drinks up George Clooney’s tequila

London-listed company to pay up to $1bn for Casamigos

Diageo share price: Group drinks up George Clooney’s tequila

Diageo (LON:DGE) has inked a deal to acquire George Clooney’s Casamigos business, the blue-chip company has said. The owner of Johnnie Walker and Smirnoff will pay up to $1 billion for the company.

Diageo’s share price lost 0.65 percent to close at 2,374.50p yesterday, slightly underperforming the broader UK market, with the benchmark FTSE 100 index shedding 24.92 points to end the session 0.33 percent lower at 7,447.79. The group’s shares have added more than 34 percent to their value over the past year, and are up by some 12 percent in the year-to-date.

Diageo announced in a statement yesterday that it had entered into a definitive agreement with Casamigos, the tequila business founded in 2013 by George Clooney, alongside Cindy Crawford’s husband Rande Gerber and real estate developer Mike Meldman. The UK group will pay an initial $700 million for the company, as well as a further potential $300 million based on a performance linked earn-out over 10 years. The deal is scheduled to close in the second half of the year.

“We are delighted to announce this transaction today to extend our participation in the tequila category,” Diageo’s chief executive Ivan Menezes commented in the statement, adding that the move supported the group’s strategy “strategy to focus on the high growth super-premium and above segments of the category”.

Bloomberg quoted Trevor Stirling, an analyst at Sanford C. Bernstein, as commenting that the price looked high.

“So much of this depends on their belief in the growth rate of this brand,” he pointed out. Diageo noted in the statement that it expects the transaction to be earnings-per-share neutral for the first three years, and to be economic profit positive in the fourth full fiscal year post-completion.

George Clooney meanwhile confirmed the sale to CNBC in an email: “We’re not going anywhere. We’ll still be very much a part of Casamigos. Starting with a shot tonight. Maybe two.”

As of 08:04 BST, Thursday, 22 June, Diageo plc share price is 2,356.00p.

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