First George Clooney became a father to twins two weeks ago. Now, British liquor giant Diageo announced it would purchase Casamigos, the tequila company he cofounded, for up to $1 billion.
The price tag includes an initial payout of $700 million, plus a further potential $300 million over the next decade based on the brand’s performance, according to Diageo. The deal is expected to close before year end, pending regulatory approval.
“If you asked us four years ago if we had a billion dollar company, I don’t think we would have said yes,” Clooney told CNBC. “But we’re not going anywhere. We’ll still be very much a part of Casamigos. Starting with a shot tonight. Maybe two.”
Founded in 2013 by actor and director Clooney, nightlife entrepreneur Rande Gerber (who is married to Cindy Crawford) and real estate tycoon Mike Meldman, the tequila initially began as a private selection for Gerber and Clooney’s acquaintances. But the pet project, which translates to “house of friends,” evolved into a legitimate business when they were forced to get a license to keep making the blue agave-derived drink.
Gerber was also thrilled about the big sale. “We created Casamigos Tequila four years ago for us to drink personally and selling it for $1 billion is something we never could have imagined,” he said in his statement. “We remain committed to our brand and look forward to our future with Diageo and continuing our work with our dedicated and passionate Casamigos team.”
Casamigos (loosely translated to mean “House of Friends”) debuted on the U.S. market in 2013, but started out as a private passion project between the friends, who were on a mission to create the perfect tequila. After two years developing it and then two additional years drinking it, Clooney and Gerber were informed they had been ordering 1,000 bottles of Casamigos a year. “They said, either you’re selling it or you’re drinking too much,” Gerber quipped.
As for the day-to-day operations, the source says, “Casamigos will be a wholly owned subsidiary of Diaego but will continue to operate as a stand-alone business. Rande, George and Mike will run the company as they always have.”
Diageo already owns Don Julio, and Deirdre Mahlan, president of the company’s North America branch, said that Casamigos will “play a complementary role alongside” their existing tequila. “I am excited by the opportunity to bring Casamigos into the Diageo portfolio which allows us to further penetrate this exciting and high growth category,” she noted. “We look forward to partnering with Rande, George and Mike to realize the full potential of the brand.”
According to Forbes, the initial $700 million payout split three ways would mean up to $233 million pretax for Clooney. After Uncle Sam’s cut, he’ll be left with closer to $140 million, with the option to earn up to another $100 million before taxes in the next 10 years if the brand performs well.
The trio put in $600,000 apiece as initial investment to start up Casamigos and reinvested profits, making the sale price a phenomenal ROI for its founders. The company is not thought to carry debts that would diminish their take-homes.
The acquisition marks the biggest celebrity beverage score to date. Coca-Cola’s $4.2 billion purchase of Vitaminwater maker Glaceau in 2007 yielded roughly $100 million for rapper 50 Cent, who owned a tiny slice of the beverage company. Three years later, Beam bought Real Housewife Bethenny Frankel’s SkinnyGirl for an estimated $100 million.
For Diageo, it won’t be its first foray into celebrity liquor: The London, U.K.-based company currently partners with Sean “Diddy” Combs on Ciroc vodka, which is to thank for a chunk of the rapper’s $820 million net worth. It also developed Pharrell Williams’ failed Q Qream liqueur.
Of course, Clooney’s deal still pales in comparison to the largest entertainer take-home ever: Rapper and producer Dr. Dre’s $620 million paycheck in 2014, after Apple bought Beats for $3 billion.