Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Diageo and former rapper Sean Combs, known as Diddy, announced a surprise settlement of their legal dispute, narrowly avoiding a public trial over their tequila joint venture.
Combs had sued the London-listed drinks group last May, for allegedly failing to honour their joint venture agreement for DeLeón, a premium tequila brand the two sides acquired in 2014.
A joint statement issued on Tuesday said Combs had “withdrawn all of his allegations about Diageo and will voluntarily dismiss his lawsuits against Diageo with prejudice”, adding that the two parties have terminated their business relationship.
When Combs filed the original lawsuit, he accused Diageo of racial discrimination, claiming the company failed to promote his lines of alcoholic drinks to the broader market having “typecast” them as “black brands”.
In the lawsuit, Combs Wines and Spirits alleged that its drinks, including DeLeón and Cîroc vodka, had received less production, distribution and sales resources for the benefit of other brands owned by the conglomerate.
Diageo, which denied all allegations and ended its decade-long partnership with the rapper, lost the first step of a legal battle after a New York court denied the company’s attempt to resolve the dispute behind closed doors.
The ruling meant the case could have proceeded to trial in a state court, which would have exposed the details of Diageo’s negotiations and correspondence with Combs.
A representative for Combs would not disclose whether, or for what amount, the rapper sold his share in the venture, but the joint statement noted Diageo was now the sole owner of the DeLeón brand.
Amid the dispute, Diageo appointed its new chief executive Debra Crew, following the death of her predecessor Ivan Menezes in June.
Diageo and the Grammy-winning Combs first joined forces in 2007 when the company hired him to promote its Cîroc vodka brand. The two sides entered a joint venture in 2013 to buy the much-hyped DeLeón Tequila, limited edition shots of which were being sold for $90 each.
The settlement comes as Combs is facing lawsuits over alleged rape and sexual assault, filed at the end of last year. The former rapper has denied the allegations. Combs’ representative did not comment on the allegations.
