Diageo has signed a definitive agreement to buy Casamigos, a premium tequila brand in the US, for up to $1bn.  

An initial consideration of $700m will be paid and a further potential $300m will be given based on a performance-linked earn-out over 10 years.

The Casamigos brand was created in 2013 by Rande Gerber, George Clooney, and Mike Meldman.

The brand touched 120,000 cases last year, primarily in the US, and posted a CAGR of 54% in the last two years.

It is on track to reach over 170,000 cases by the end of this year.

The deal is expected to close in the second half of the year, subject to regulatory clearances.

"It is on track to reach over 170,000 cases by the end of this year."

Diageo expects that the sale will be EPS-neutral for the first three years and accretive thereafter.

The firm anticipates the acquisition to be economically profit positive in the full fiscal year post-completion.

The purchase will be funded through existing cash resources and debt.

Diageo CEO Ivan Menezes said: “It supports our strategy to focus on the high-growth super-premium and above segments of the category.

“With the global strength of Diageo, we expect to expand the reach of Casamigos to markets beyond the US to capitalise on the significant international potential of the brand. We look forward to building on the remarkable success of Casamigos to date.”

Diageo North America president Deirdre Mahlan said: “We believe Casamigos will play a complementary role alongside Tequila Don Julio.”