Sean Combs Sold Share of Tequila Brand for $200 Million
Sean Combs, the music mogul whose business empire has been upended by recent lawsuits accusing him of sexual assault and a federal investigation, sold his half of the tequila brand DeLeón for about $200 million this year, according to a public report for investors.
Mr. Combs, who has vehemently denied allegations of sexual assault and sex trafficking, came to prominence as a hip-hop impresario but amassed much of his wealth from other businesses, including through work with the liquor giant Diageo. Their partnership, which was thrown into turmoil last year before the sexual assault lawsuits, is now over.
Diageo disclosed in a recent financial statement that it had agreed on Jan. 16 to buy the 50 percent stake in the DeLeón tequila brand from Mr. Combs’s company, Combs Wine and Spirits, “for a total consideration of approximately $200 million.”
Mr. Combs’s work with Diageo began more than 15 years ago when he began promoting its vodka brand Ciroc. He purchased DeLeón in a joint venture with the company about a decade ago, leveraging his celebrity to promote the tequila brand on social media, in interviews and as a prop in music videos.
According to a court filing in June by a Diageo executive, Mr. Combs — who has also been known throughout his career as Puff Daddy or Diddy — amassed nearly a billion dollars from his relationship with the company.
But the mogul’s partnership with the liquor giant began to fray, spilling into public last year. Combs Wine and Spirits sued Diageo and accused it of typecasting Ciroc and DeLeón as “Black brands” that should be targeted only to “‘urban’ customers,” limiting potential growth.
Diageo denied the allegations of racism and accused Mr. Combs of “mismanagement.” The company also accused him of breaching his contract when he made the public accusations and moved to terminate his relationship with Ciroc, which led to a ballooning legal fight between Diageo and Mr. Combs’s company.
The recent lawsuits accusing Mr. Combs of rape and sexual assault became a factor in the legal battle with Diageo, part of which hinged on the question of whether Mr. Combs should be allowed to continue to serve as the face of DeLeón.
“Mr. Combs is well-aware that these lawsuits make it impossible for him to continue to be the ‘face’ of anything,” lawyers for Diageo wrote in December.
The recent series of lawsuits began in November when a former girlfriend, Casandra Ventura, accused him of years of sexual and physical abuse. It was settled in one day. But a number of other suits soon followed, including a lawsuit accusing Mr. Combs of taking part in a gang rape in 2003, and another in which a male music producer accused Mr. Combs of unwanted sexual contact.
Mr. Combs has denied the accusations against him, saying that “sickening allegations have been made against me by individuals looking for a quick payday.”
Mr. Combs’s legal challenges have appeared to grow more serious in recent weeks, following the raids on his homes in Los Angeles and Miami Beach, Fla., which a federal official said were related to what is at least in part a human trafficking investigation.
Diageo and Mr. Combs cut ties before the raids, in January.
The monthslong legal dispute between Mr. Combs and Diageo had aired internal business and personal grievances in court filings. The claims were both large in scale — Mr. Combs’s lawsuit accused Diageo of employing language about diversity and equality while shortchanging him as a Black partner — and minute, with Mr. Combs charging that a bottle redesign involved stickers that were “prone to bubbling,” making the product look cheap. In court filings, Diageo called itself a “demonstrated champion of diversity” and said it was aware of a “single instance” of a label bubbling that was “promptly addressed.”
“Sean Combs and Diageo have now agreed to resolve all disputes between them,” they said in a joint statement in January. “Mr. Combs has withdrawn all of his allegations about Diageo and will voluntarily dismiss his lawsuits against Diageo with prejudice. Diageo and Mr. Combs have no ongoing business relationship, either with respect to Ciroc vodka or DeLeón tequila, which Diageo now solely owns.”
The statement did not disclose the amount that the company paid for his share of DeLeón.
At the end of January, Diageo disclosed the $200 million figure in the financial report, which went largely unnoticed at the time outside of the trade press that covers the liquor industry. “In connection with this acquisition, the previously outstanding disputes between the shareholders were resolved and Diageo is now the 100 percent owner of the DeLeón brand,” the report said.
