Brown-Forman rejects Sazerac’s $15bn takeover approach
Brown-Forman has turned down a US$15 billion cash offer from Sazerac, extending uncertainty over the future ownership of the Jack Daniel’s maker. The rejection follows the collapse of recent merger talks with Pernod Ricard.
Brown-Forman has turned down a $32 per share ($15 billion) cash takeover offer from Sazerac.
The rejection comes only weeks after Brown-Forman, the owner of the Jack Daniel’s and Woodford Reserve bourbon brands, failed to agree on a proposed merger of equals with Pernod Ricard of France.
Brown-Forman shares fell a further 1% to $26.56, well below Sazerac’s offer price.
Sazerac moved quickly after merger talks
New Orleans-based Sazerac, which is privately owned by the Goldring family, rapidly expressed interest in a full takeover of Brown-Forman when the news broke of its possible merger with Pernod Ricard.
It is widely reported that those negotiations fell apart late last month, not over valuation, which apparently both sides were close to agreeing, but over future control of the new entity.
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Brown family reluctant to lose influence
The Browns, who have run the Kentucky distiller for five generations, were unwilling to cede control, demanding a continued significant holding to give them a voice over future direction.
Brown-Forman is said to have preferred the French overture and there are unconfirmed rumours that Pernod Ricard is considering coming forward with a second proposal.
Structure of Sazerac proposal
Sazerac’s offer was backed by Wells Fargo and Apollo Global Management and would have given Brown Forman’s Class A shareholders the option to either take cash or transfer their shares into the new company, diluting the Goldrings’ previous 100% control but not allowing significant influence on management.
Both Sazerac and Brown-Forman declined to comment on the reports, which were first published by The Wall Street Journal.
Potential market impact
Sazerac generates more than $6 billion in annual net sales, topping Brown-Forman’s annual net sales of around $4 billion.
A tie-up between the two would have created a dominant US player controlling roughly 30% of the American whiskey market, some analysts have said. A combination of the two would also have meant greater clout in negotiations with major US distributors.
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