Diageo has agreed to acquire premium brand Aviation Gin and its owner Davos Brands for a total consideration of up to $610 million.

The transaction will see Diageo take ownership of Aviation American Gin which is claimed to be the second largest and one of the fastest growing brands within the super-premium gin segment in the US.

The deal includes an initial payment of $335 million and a further potential consideration of up to $275 million based on the performance of Aviation American Gin over a ten-year period. 

While Aviation American Gin was majority-owned by Davos Brands, Hollywood actor Ryan Reynolds bought a stake in the brand in 2018. Following the transaction, Reynolds will retain an ongoing ownership interest in the gin.

Through the acquisition, Diageo will also acquire the other brands in the Davos Brands’ portfolio such as Astral Tequila, Sombra Mezcal and TYKU Sake. With its expertise, Diageo aims to further develop these other brands.

“The acquisition of Aviation American Gin and the Davos Brands portfolio is in line with our strategy to acquire high growth brands with attractive margins that support premiumisation,” said Ivan Menezes, CEO of Diageo. 

He added: “We are confident that Aviation American Gin will continue to shape and drive the growth of super premium gin in North America and we are looking forward to working with Ryan Reynolds and the Davos Brands team to accelerate future growth.”

Debra Crew, president of Diageo North America, said: “We believe Aviation American Gin will play an important role in building on the long term premiumisation trends in the US.

“The entrepreneurialism of the Davos team and Ryan Reynolds combined with Diageo’s strengths will help drive the continued momentum of the brand in North America and we feel confident that with Ryan’s global reach that Aviation Gin can expand internationally.”

The acquisition is expected to close before the end of 2020, subject to regulatory clearances.