May 24, 2011 / 9:14 PM / 7 years ago

UPDATE 1-Diageo in talks to buy Jose Cuervo-Bloomberg

(Updates to include comment from unnamed source)

NEW YORK, May 24 (Reuters) - Diageo Plc (DGE.L), the maker of Johnnie Walker scotch and Smirnoff vodka, is in talks to buy tequila brand Jose Cuervo for more than $2 billion, Bloomberg reported on Tuesday.

Cuervo is in exclusive talks with Diageo, which has the first option to buy the company because of its international distribution rights to the brand, Bloomberg reported.

Diageo declined to comment.

Earlier this month, Reuters reported that the maker of Jose Cuervo, the world’s best-selling tequila brand, was not considering putting the property on the block, despite being courted by other companies eager to add the drink to their portfolios.

Juan Beckmann Vidal, chairman of Casa Cuervo and heir to a tequila empire founded in the late 1800’s, said his company is renegotiating a distribution deal it has with long-time partner Diageo, which he said is due to expire in late 2012.

Such talks may have led to renewed market speculation the Mexican brand may be up for sale, Beckmann Vidal told Reuters at the time.

A source familiar with the situation, however, said nothing was imminent.

“I would downplay the fact that anything is going to happen with Cuervo in the short term,” said the source, who declined to be named. The source was not authorized to speak with the media.

Beckmann Vidal was not immediately available to comment on Tuesday. (Additional reporting by David Jones) (Reporting by Jessica Hall; editing by Andre Grenon and Carol Bishopric)

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