Jose Cuervo Aims For $1 Billion IPO

The world’s biggest tequila maker from Mexico, Jose Cuervo, announced their initial public offering on Tuesday. The offering could raise up to $1 billion, another indication of a wider restoration in Latin American stock flotations.

Jose Cuervo is North America’s primary tequila brand. The company could spark interest under its two-centuries-old tradition: premium tequila at the expense of vodka. Also, after several years of decline, they may return to grow in the U.S. market.

Gerardo Copca noted that this year there were only two or three IPOs in Mexico. However, the country was one of the best for stock flotations last year in a rather bleak world climate.

The Brazilian IPO market also shows signs of revival elsewhere in Latin America.

The filing provided minimal details on the IPO. However, a source suggests the company could raise between $500 million and $1 billion.

The company known as Becle said local units of Banco Santander (SAN.MC), JP Morgan Chase & Co (JPM.N), Morgan Stanley (MS.N), and GBM Grupo Bursatil Mexicano, a local broker, would handle the stock sale.

Along with the bourse flotation in Mexico, they also plan a private placement to investors in the United States. In the US the tequila market has been shifting toward 100 percent high-end agave brands.

Cuervo said that the profits would fund organic and external growth, and broaden its portfolio. They have also moved toward premium brands, taking on rivals such as Diageo, with whom they once had a distribution deal.

In 2012, UK-based Diageo (DGE.L) attempted to buy Jose Cuervo, when the company was worth around $3 billion. Diageo (DGE.L) swapped their Bushmills Irish whiskey brand for Cuervo’s 50 percent stake in 2015.

Jose Antonio de Cuervo started the brand in the late 1700’s before Mexico’s independence from Spain. Jose Cuervo is North America’s oldest spirit producing company.

With origins in the beautiful town of Tequila in Jalisco, the Beckmann family now owns the business. They married into the Cuervos over a century ago. After the IPO, the Beckmann’s will remain the majority shareholder.

Jose Cuervo Sales

The company said their 2015 sales were nearly 20 billion pesos ($1.02 billion) in the filing, increasing a quarter from 2014. Cuervo had 12.2 billion pesos of revenue in the first half of 2016, with a net profit of 5.3 billion pesos in 2015.

Cuervo has risen 3 percent to 3.5 million cases, returning to U.S. growth, and remains two-thirds larger than Sauza and Patron, its closest rivals there.

The US and Canada represent two-thirds of their sales, while Mexico generates over a fifth of revenue.