LONDON (Reuters) - Diageo Plc DGE.L has agreed to buy George Clooney's high-end tequila brand Casamigos for up to $1 billion, as the world's largest spirits maker seeks to lift its presence in a high-growth market.

Diageo said late on Wednesday it would pay $700 million initially for the company, co-founded by the American actor, with potential payment of a further $300 million linked to performance over 10 years.

The deal comes two weeks after Pernod Ricard PERP.PA took a stake in mezcal maker Del Maguey, and highlights the opportunity companies see in Mexico's native spirits.

Several new, high-end tequilas has helped the drink change its traditional image as a party beverage for young drinkers. Its sales rose 5.2 percent globally last year, according to data tracker IWSR, outperforming a spirits industry that edged up only 0.3 percent.

Diageo did not disclose revenue or profit figures, but Morgan Stanley estimates the deal’s enterprise value was about 20 times annual turnover, which an industry source said would make it much pricier than other spirits deals, which he said often get done at about 4 to 6 times sales.

Diageo’s North American president, Deirdre Mahlan, told reporters that high-growth companies like Casamigos were “notoriously challenging to value under traditional methods”.

Casamigos, which means “house of friends,” was founded in 2013 by Clooney and his friends - nightlife entrepreneur Rande Gerber, who is married to model Cindy Crawford, and real estate developer Mike Meldman. They will continue to promote the brand.

Actor George Clooney holds his trophy during a photocall after receiving an Honorary Cesar Award at the 42nd Cesar Awards ceremony in Paris, France, February 24, 2017. REUTERS/Gonzalo Fuentes

Diageo, which has arrangements with other celebrities including David Beckham and Sean Combs, said Casamigos would be neutral to earnings for the first three years and add to earnings thereafter.

“If the brand sustains its growth, it could potentially be the next Patron,” Morgan Stanley analysts said, citing the biggest competitor in high-end tequila. “But if not, it might be value destructive.”

They said the success of Casamigos, which has grown 54 percent over the last two years, depended on the brand owners’ star status, and flagged a risk of losing focus in the next 10 years.

Diageo's shares were down 1.3 percent at 0923 GMT on Thursday, underperforming the FTSE .FTSE.

The brand sold 120,000 cases in 2016, primarily in the United States, and is on track to reach over 170,000 by the end of the year. Diageo said expanding the brand to Europe would be a source of future growth.

Casamigos sells for $45 to $55 per bottle, about the same price as Diageo’s other Don Julio tequila.

Bernstein analysts said Diageo could successfully sell both, with Casamigos promoted as a celebrity lifestyle brand, and Don Julio positioned as a heritage craft spirit, but they were sceptical.

“In our experience, it is difficult for sales, distributors and customers to focus on two brands in the same category at similar price points at the same time,” they said.

Diageo distributed the much bigger Jose Cuervo brand outside of Mexico until 2012, following its failure to strike a deal to buy it outright from the its founding family. In 2015, it took over the Don Julio brand it had previously shared with the family, trading it for its Bushmills Irish whiskey and cash.

The Casamigos deal is expected to close in second half of the year.