Diageo seen considering $2 billion Jose Cuervo bid

LONDON Sun Mar 20, 2011 11:35am EDT

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LONDON (Reuters) - The world's biggest spirits maker Diageo (DGE.L) is reported to be considering a $2 billion bid for tequila brand Jose Cuervo, as consolidation within the global drinks sector intensifies.

The Sunday Times said in an unsourced report that the Beckmann family was in talks to appoint Barclays (BARC.L) to explore a possible sale of all or part of the Jose Cuervo brand.

London-based Diageo, whose brands include Johnnie Walker whisky, Smirnoff vodka and which already has distribution rights for Jose Cuervo, declined to comment on the report.

Other companies which might be interested in Jose Cuervo included Bacardi, Pernod Ricard (PERP.PA) and Brown-Forman (BFb.N), the British paper added.

The world's drinks sector has already seen a spate of deals over the last year.

Last month Diageo agreed to buy Turkish raki spirits maker Mey Icki for 1.3 billion pounds ($2.1 billion), while French drinks group Remy Cointreau (RCOP.PA) entered talks to sell its loss-making champagne business.

There has also been speculation of bidders for the spirits arm of American consumer goods group Fortune Brands FO.N, and rumours Anheuser-Busch InBev (ABI.BR) may target SABMiller (SAB.L) (SABJ.J).

Diageo shares closed up 0.4 percent at 1,143 pence on Friday, giving the group a market capitalization of around 29 billion pounds.

(Reporting by Sudip Kar-Gupta; Editing by Alexander Smith)

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