Pernod Ricard and Brown-Forman have ended merger talks after the French spirits company and the Kentucky-based owner of Jack Daniel’s whiskey failed to reach mutually acceptable terms, they said on Tuesday.
The companies disclosed last month that they were in discussions over a potential merger that would have combined the world’s second-largest spirits maker with the largest producer of American whiskey.
During the talks, American spirits group Sazerac, which owns brands including Corazón tequila and Svedka vodka, emerged as a new bidder this month for Brown-Forman.
“Pernod Ricard remains fully focused and confident in its strategy and operating model, supported by strong and committed teams across the group to deliver sustainable long-term value for all stakeholders,” the company said on Tuesday.
Brown-Forman, whose shares were down about 5 per cent in extended trading, said it intends to focus on “strategic and operational priorities,” including “unlocking future growth by expanding our geographic footprint.”
A spokesperson for Pernod, which also makes Jameson and Powers Irish whiskey, told Reuters that the decision to call off the talks was “mutual”, and the companies decided it was in the best interests of shareholders.
The decision reflected a “combination of elements” relating to debt structure and economics, and no single issue, the spokesperson continued.
A source said the family that controls the Jack Daniel’s maker favoured a potential sale to the French distiller over the rival proposal from Sazerac.
The proposed terms for the Pernod deal, which would have combined cash and stock, would have allowed the Brown family, which has controlled the Jack Daniel’s maker since 1870, to retain a meaningful stake and some degree of influence in the combined company, a source told Reuters last week.
By contrast, Sazerac, controlled by the Goldring family, has offered Brown-Forman about $15 billion (€12.82 billion), or $32 per share, a source familiar with the matter said this month.
Industry advisers had said Sazerac’s approach would likely require an all-cash offer and higher leverage, effectively forcing the Brown family to relinquish control. – Reuters
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