The family controlling Brown-Forman Corp. favors a potential transaction with Pernod Ricard SA. The French conglomerate’s competitor in this scenario is the American firm Sazerac.
The family that owns the maker of Jack Daniel’s whiskey backs a prospective deal with the French group Pernod Ricard over the American rival Sazerac, Bloomberg reports, citing an insider familiar with the negotiation progress.
Brown-Forman has been in merger talks with Pernod Ricard since late March, yet in early April, a second suitor—Sazerac—entered the fray. However, the Brown family, which holds sway over Brown-Forman, shows a clear preference for the French partner. The proposed terms for uniting with Pernod would afford the family a larger stake and greater influence within the enterprise.
The anticipated structure for the Pernod Ricard transaction involves payment comprising 80% equity and 20% cash, according to sources. During discussions, Brown-Forman and Pernod explored maintaining Louisville, Kentucky, as a vital location for the combined entity, though it remains uncertain whether it would function as the main headquarters or merely a significant operational hub.
The Wall Street Journal suggests Sazerac is formulating a bid to acquire Brown-Forman for $15 billion, equating to roughly $32 per share. Brown-Forman’s market valuation stood at approximately $13.6 billion when the discussions were initially disclosed.
Analysts at Barclays caution that an acquisition by Sazerac might trigger substantial antitrust hurdles due to the significant overlap in brand portfolios; the merged entity would command over 30% of the U.S. whiskey market. Conversely, a merger with Pernod Ricard presents no such regulatory jeopardy. The analysts also project that the Pernod deal could yield annual synergies up to $450 million for the combined company, aiding in offsetting the worldwide decline in alcohol consumption.
On April 20th, Brown-Forman shares dipped by 1% to $28.94, establishing its market capitalization, while Pernod Ricard’s stock price saw no movement, with its market value holding steady near $20 billion. Year-to-date, Brown-Forman’s shares have appreciated by 11.63%.
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