Bacardi will buy premium tequila maker Patron in a deal valuing the company at $5.1bn (£3.7bn), as demand for high-end spirits grows around the world.
Bacardi, best known for its rum, first bought a minority stake in Patron a decade ago. Tequila has long been popular in North and Central America and has been gathering popularity further afield in recent years.
High-end brands like Patron have attempted to rid the spirit of its association with partying and give it a more sophisticated image.
The deal is the latest of a string of high-profile takeovers in the premium spirits sector. Pernod Ricard bought out Avion Tequila last week while Diageo bought George Clooney’s Casamigos tequila for up to $1bn in June last year.
“Adding Patron to the Bacardi portfolio creates a tremendous opportunity for the brand outside of the United States as Bacardi's international distribution network will help grow Patron around the world, increasing scale in the US and globally,” said Mahesh Madhavan, Bacardi chief executive.
Annual tequila sales in the UK grew 5 per cent in 2016 to $18.1m a recent report by the UK's Wine and Spirit Trade Association found.
Bacardi already owns the Cazadores and Corzo tequila brands and is the world's biggest privately-owned spirits firm.
Bermuda-based Bacardi was founded in Cuba in 1862 and now owns brands including Grey Goose vodka, Bombay Sapphire gin and Dewar's whisky.
The deal is expected to complete in the first half of this year.
