Brown-Forman has rejected a $32-per-share cash takeover offer from U.S. spirits maker Sazerac, according to a source familiar with the matter, weeks after talks between the Jack Daniel’s maker and France’s Pernod Ricard fell apart.
Brown-Forman shares closed down 1% at $26.56 on Tuesday, well below Sazerac’s offer price.
Privately owned Sazerac emerged as a suitor for Brown-Forman last month, after Brown-Forman and Pernod disclosed talks over a possible merger. Those talks ended in late April after the companies failed to reach mutually acceptable terms.
Sazerac, which owns more than 500 brands, including Buffalo Trace whiskey and Fireball, and is controlled by the Goldring family, had submitted a $15 billion offer for Brown-Forman in April.
The offer was financially backed by Wells Fargo and Apollo Global Management and would have given Brown-Forman’s Class A shareholders the option to take cash or roll their shares into the new company, the source added.
Sazerac and Brown-Forman declined to comment. The Wall Street Journal first reported the development.
The rejection of the Sazerac offer comes at a time when the spirits industry is grappling with a prolonged slump, as declining alcohol consumption has squeezed volumes across the sector.
Multiples for consumer goods companies have fallen sharply, and dealmakers increasingly see scale as the answer, bankers and analysts have said.
The Brown family, which controls Brown-Forman, favored a potential sale to Pernod over Sazerac’s rival proposal, a source familiar with the matter told Reuters last month. The family viewed Pernod as the more prestigious acquirer, with a portfolio of stronger and more recognizable brands, the source added.
Pernod’s brands include Jameson Irish Whiskey, Absolut Vodka and Malibu Rum.
The structure of the two potential deals also differed sharply. Pernod’s proposed terms would have been a mostly stock deal akin to a merger of equals, allowing the Brown family to retain a meaningful stake and some influence in the combined company, a source told Reuters last month.
Sazerac’s approach, by contrast, would have required more cash, higher leverage and effectively forced the Brown family to relinquish control.
Sazerac generates more than $6 billion in annual net sales, topping Brown-Forman’s around $4 billion of annual net sales.
A tie-up between the Kentucky neighbors would have created a dominant U.S. 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 U.S. distributors.
Source: Reuters.com