Diageo PLC (DGE.L) is nearing a deal with Jose Cuervo that would give the British liquor company full ownership of Don Julio tequila in exchange for its Bushmills whiskey label, the Wall Street Journal reported on Saturday, citing people familiar with the matter.

The two sides are in advanced talks for a deal that would hand Diageo the 50 percent of Don Julio that it does not already own as well as a cash payment, the Journal reported. In return, it would hand over Bushmills to Cuervo, the paper said.

Exact terms of the expected agreement, which could be announced as soon as next week, could not be learned, the Journal said.

A spokesman for Jose Cuervo declined comment to Reuters. A Diageo spokeswoman also declined comment.

The deal would enable Diageo, the world's biggest maker of spirits, to boost its presence in the high-end tequila segment after its efforts to buy Jose Cuervo outright fell apart nearly two years ago, the Journal said.

Jose Cuervo, owned by the Beckmann family of Mexico, and Diageo long had a distribution pact that terminated last year.

Don Julio is an upscale portfolio of tequilas that currently enjoys sales increases of about 25 percent a year, outstripping the growth of Jose Cuervo, the world's biggest tequila brand, the paper said.