George Clooney is a world-famous actor. After his break on E.R., the Kentucky gentleman played everyone from Batman to master thief Danny Ocean. Since then, Clooney produced and starred in dozens of films, solidifying his place among Hollywood’s elite.
Clooney is also a businessman. He started Casamigos Tequila with partners Rande Gerber and Michael Meldman in 2013. In four years, Casamigos became a major tequila brand. Stores across America started carrying the premium spirit. Casamigos sales soon grew enough to affect sales of longstanding tequila brands.
As of today, Casamigos will become a part of Diageo ($DEO), one of the biggest liquor companies in the world. Clooney, Gerber, and Meldman will received $700 million total for their efforts. For Clooney superfans, this means you can finally invest in the man himself.
Diageo is buying Casamigos for $700 million to $1 billion.
Clooney and partners will become richer by a whopping nine figures each when the deal closes. If Casamigos performs well over ten years, the three partners will receive $300 million more. This means more money in Clooney’s deep pockets and more money for Diageo, a company worth $75.5 billion.
What does this mean for George Clooney?
Clooney and partners will stay on with Casamigos even after it moves to Diageo. The actor will remain the focus of the liquor’s marketing, which helped Casamigos sell millions of bottles. If the marketing drives more sales, he’ll end up $100 million or so richer in a decade. For now, Clooney will take home at least a couple hundred million dollars when the deal closes.
What does this mean for Diageo?
Diageo already has several tequila brands under their belt, including Don Julio. Casamigos’ recent surge in popularity likely cut into sales of Diageo tequila. When Diageo owns Casamigos, they will get those sales back and make more money from their former competitor. The company stated that Casamigos won’t affect their earnings until 2021. So, sales of Casamigos are an added bonus to all the money Diageo expects to make for the next four years.
Should you invest in Diageo (and, yes, George Clooney)?
Diageo’s shares decreased by .26% after the acquisition announcement. This is because the company is spending $700 million to $1 billion of their existing cash on hand. This is a significant chunk of change, even for the world’s second-largest distiller. Some investors don’t see the benefit of spending so much money on Clooney’s tequila. Others see it as a way to cut out competition and make money from an already-popular product.
If you believe George Clooney and his tequila will help Diageo’s bottom line, you could invest in $DEO. By investing in the company, you have faith in their future performance. You believe the company will get a return on their investment in Casamigos. In turn, this will help George Clooney get that nice fat hundred-million-dollar bonus down the line.
If you think this is way too much to invest in a tequila, or if you think Diageo won’t make their money back, simply invest elsewhere.