Bacardi Ltd., the spirits maker best known for its rum, is nearing a deal to acquire Ilegal Mezcal after private equity firm L Catterton held talks to buy the company, according to people with knowledge of the matter.

A deal would value Ilegal Mezcal at less than $200 million, the people said, asking not to be identify discussing private information.

Bacardi, alongside private equity firm VMG Partners, is an existing investor in Ilegal Mezcal and has a right of first refusal in a sale, the people said.

Bacardi owns about 20% of Ilegal Mezcal and the deal price is expected to be in the range of $120 million to $130 million in cash, according to the company’s annual report seen by Bloomberg News. The company also confirmed it exercised its right of first refusal and said the deal is slated to close in the first half of fiscal year 2024.

A representative for Bacardi didn’t respond to a request or comment. Ilegal Mezcal and L Catterton declined to comment.

Bacardi bought a minority stake in Ilegal Mezcal in 2017, before its $5.1 billion acquisition of Patron Tequila a year later as agave spirits rose in popularity. Rivals like Davide Campari-Milano SpA and Absolut Vodka distiller Pernod Ricard SA also own mezcal brands.

Ilegal Mezcal, now operating in the US, traces its roots to 2004, when John Rexer started bringing bottles of the liquor from Oaxaca, Mexico, to stock his bar in Antigua, Guatemala.

(Updates with information from Bacardi’s annual report in paragraph three)