Diageo has confirmed it has ended talks to acquire tequila brand Jose Cuervo.

The drinks giant was first linked to the brand in March 2011, and in August this year reports suggested a deal worth around $3bn had been thrashed out.

But in a statement today, Diageo said discussions had ended.

“Both parties will now work to ensure the orderly termination of the current distribution agreement, including transitional arrangements, at the end of June 2013,” it said.

CEO Paul Walsh added: “Diageo has had a long and successful relationship with the Cuervo brand and we are proud of what we have achieved for the brand as its distributor over many years.

“We believe that the future of the brand would be best delivered by aligning ownership of the brand with its route to market and I have no doubt that Diageo has the best route to market for this brand. However it has not been possible to agree a transaction which delivers value for Diageo’s shareholders and therefore, by mutual agreement, we have terminated our discussions.”