Shares in alcoholic drinks behemoth Diageo (DGE) have dipped 1.6% to £23.36 after it agreed to acquire US super-premium tequila brand Casamigos, which was founded partially by superstar George Clooney.

Diageo believes that Casamigos provides an opportunity to expand its tequila range and its global brand - at a steep price of up to $1bn. The deal involves an upfront payment of US$700m, with Diageo on the hook for another $300m outlay based on the acquired tipple's performance over ten years.

The founders, also including Rande Gerber and Mike Meldman, will continue to build the Casamigos brand in the US. Diageo expects the acquisition will enhance earnings per share after three years.

Announced after the London market closed on Wednesday, the deal has triggered a drop in the Diageo share price today, some investors feeling the Johnnie Walker-to-Smirnoff brands owner has overpaid.

However, some analysts disagree. Jefferies scribe Edward Mundy believes the deal is a step in the right direction, accelerating Diageo's growth in the high-end tequila space.

He disagrees with criticism that Casamigos could cannibalise sales of Diageo’s other tequila brand Don Julio.

The analyst says the Casamigos brand is distinctive from Don Julio as it is viewed more as a lifestyle brand with greater appeal to female consumers.

This is a very different from Don Julio’s brand, which is viewed as ‘high quality, connoisseurs’ liquid.'

Bank of America Merrill Lynch analyst Fernando Ferreira is also positive on the acquisition.

While the deal is relatively small, he says Casamigos will add a ‘high growth premium brand’ to its US portfolio. Premium tequila (100% agave) is a high growth category, according to the analyst. Research firm IWSR highlights 10% growth in value of tequila and 5.4% increase in volumes in 2016.

Find out how to deal online from £1.50 in a SIPP, ISA or Dealing account. AJBell logo

Issue Date: 22 Jun 2017