Pernod Ricard and Jack Daniel's owner Brown-Forman end merger talks
Merger Negotiations and Outcome
(Corrects paragraph 7 to show decision reflected issues with deal structure, not debt structure)
By Abigail Summerville and Emma Rumney
Background of the Merger Talks
NEW YORK/LONDON, April 28 (Reuters) - 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.
Emergence of Rival Bidders
During the talks, American spirits group Sazerac, which owns brands including Corazon tequila and Svedka vodka, emerged as a new bidder this month for Brown-Forman.
Statements from the Companies
Pernod Ricard's Position
"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's Response
Brown-Forman, whose shares were down about 5% in extended trading, said it intends to focus on “strategic and operational priorities,” including “unlocking future growth by expanding our geographic footprint.”
Details Behind the Decision
Mutual Agreement
DECISION WAS MUTUAL
A Pernod spokesperson told Reuters that the decision to call off the talks was "mutual", and the companies decided it was in the best interests of shareholders.
Deal Structure and Economics
The decision reflected a "combination of elements" relating to deal structure and economics, and no single issue, the spokesperson continued.
Family Influence and Stake
A source said the family that controls the Jack Daniel's maker favored 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.
Sazerac's Competing Offer
By contrast, Sazerac, controlled by the Goldring family, has offered Brown-Forman about $15 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.
Reporting Credits
(Reporting by Aishwarya Venugopal in Bengaluru, Abigail Summerville in New York and Emma Rumney in London; Editing by Sriraj Kalluvila, Echo Wang and David Gregorio)
