Diageo has agreed an out-of-court settlement in its four-year battle with Tequila maker, Jose Cuervo. Diageo will return the 45 per cent equity stake it holds in Jose Cuervo SA and Jose Cuervo will transfer back to Diageo its ownership interest in certain Diageo brands in Mexico. New arrangements have been formalised in respect of Diageo's distribution rights for the Cuervo brand in the United States, which now extends to 2013. Diageo and Jose Cuervo have agreed to terminate their litigation in respect of the Cuervo brand. Diageo says the net effect will involve an outflow of cash for Diageo of $145m, but it does not expect a material effect on its profits. 'This agreement means that we will continue to work together to maintain the success of the Cuervo brand as part of Diageo's premium drinks portfolio,' said Paul Walsh, Diageo's chief executive.
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