By Joe Hoppe

Diageo PLC said Monday that it has agreed to acquire Aviation American Gin through the acquisition of Aviation Gin LLC and Davos Brands LLC for a total consideration of $610 million.

The world's largest liquor maker said the consideration includes an initial payment of $335 million, and a further potential consideration of up to $275 million based on performance over 10 years. The deal is expected to close by the end of the year.

Through the acquisition, Diageo will acquire the other brands in the Davos Brands' portfolio, including Astral Tequila, Sombra Mezcal and TYKU Sake.

"The acquisition of Aviation American Gin and the Davos Brands portfolio is in line with our strategy to acquire high-growth brands with attractive margins that support premiumization," Diageo Chief Executive Ivan Menezes said.

Shares at 1210 GMT were up 19.5 pence, or 0.8%, at 2,622.5 pence.

Write to Joe Hoppe at joseph.hoppe@wsj.com