Bidding battle looms for Brown-Forman ownership

A potential takeover approach by Sazerac has intensified speculation over the future of Brown-Forman. The move comes as the Jack Daniel’s owner is already in talks with Pernod Ricard over a possible merger of equals.

Is a bidding war about to break out for ownership of Brown-Forman?

The Wall Street Journal has reported that the privately owned Sazerac spirits group has approached the owner of the Jack Daniel’s Bourbon brand about a potential deal.

Last month, Pernod Ricard of France and Brown-Forman announced they were in talks to create a “merger of equals” as both groups seek to reinforce their global positions in the face of changing consumer patterns and wariness about spending at the same time as combating the effects of tariffs.

Shares of Brown-Forman surged nearly 14% on the news of Sazerac’s approach.

Kentucky rivals dominate US whiskey

Both Sazerac and Brown Forman are based in Louisville, Kentucky, and hold strong positions in the US whiskey market through Jack Daniel’s, Old Forester and Woodford Reserve, alongside Sazerac’s Buffalo Trace and Fireball Cinnamon.

A successful union of both companies would create significant cost savings in both production and global distribution, but it would also undoubtedly face regulatory anxieties among antitrust authorities.

Family control complicates negotiations

Both American companies and Pernod Ricard operate under effective family control (Sazerac is 100% privately owned), so the question of who would run a future group will bear on discussions.

The French Government has also expressed an interest in the future headquarters of any merged company featuring Pernod Ricard. This is seen more as a question of procedural protocol rather than regarding Pernod Ricard as a “national champion”.

Potential deal structures under discussion

Brown-Forman has a market value of some $12.4 billion, while Pernod Ricard is worth about $19 billion.

Analysts calculate that Pernod Ricard has been the driving force in the discussions and assume that the talks between the French and Brown-Forman centre on an exchange of shareholdings and a possible premium payment to American shareholders.

A full union would create a group worth more than $35 billion to rival Diageo, which is valued at more than $40 billion.

A deal with Sazerac, however, could be through a full takeover, as Sazerac has no publicly listed shares to use in a merger.

Powerful portfolios on both sides

Sazerac has more than 550 brands in its portfolio, including Herradura Tequila, while Pernod Ricard has a 200-plus brand drinks cupboard, including Chivas Brothers scotches, Jameson Irish whiskey and Absolut vodka.

Sazerac traces its roots to a 1630 vineyard and distillery in France. Over the years, the company has acquired brands from Seagram and Constellation Brands. Last month, it announced it would acquire Dirty Shirley, ready-to-drink cocktails and bought BuzzBallz in 2024.

Previously rejected bids

In May 2017, Brown-Forman rejected a takeover bid from Constellation Brands, confirming the Jack Daniel’s owner was “not for sale”. The controlling Brown family, in its fifth generation, rejected the undisclosed offer to maintain independence. Following the rejection, Brown-Forman affirmed its focus on its spirits and wine business.

Wider industry interest grows

The very fact that talks are taking place has prompted speculation that other global drinks giants such as Diageo, Bacardi and Suntory are keeping close watch on developments and themselves might be willing to enter the fray.

There is even speculation that because Brown-Forman is “in play”, the industry could be approaching a repeat of the takeover and breakup activity in the early 2000s that saw the dismemberment of both Seagram and Allied Domecq and the disappearance of Sweden’s Vin & Sprit.

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