Talks between Pernod Ricard and Brown-Forman over a possible merger are continuing, the French spirits giant’s CFO has said.
Three weeks ago, the distillers announced they were in talks over a deal to form a “partnership akin to a merger of equals”.
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Since then, reports have emerged Sazerac has approached Brown-Forman about a possible transaction between the two US spirits groups.
Speaking to analysts today (16 April) after Pernod published its third-quarter sales figures, CFO Hélène de Tissot made a brief statement on the status of the company’s talks with Brown-Forman.
“Before I begin discussion on our Q3 sales results, I thought I would say a word regarding our press release of 27 March in which we confirm discussions are taking place regarding the potential business combination with Brown-Forman. As stated, we did not intend to communicate further until either an agreement is reached or discussions are terminated. Discussions are ongoing, so at this stage, I have no further comment to make,” de Tissot said.
In Pernod’s statement last month, the Jameson whiskey maker said the “contemplated combination would create a global spirits leader with enhanced scale, a powerful brand portfolio and a balanced geographic footprint, all anchored by two iconic families”.
A deal between Pernod and Brown-Forman would bring together two of the world’s largest spirits groups. As well as Jack Daniel’s, the Brown-Forman product range includes Woodford Reserve whiskey and Diplomático rum. Pernod, the world’s second-largest distiller behind Diageo, owns brands including Beefeater gin, Absolut vodka and Chivas Regal whisky.
US distiller Sazerac is home to brands including Buffalo Trace whiskey, BuzzBalls RTDs and Svedka vodka.
Reports last week by Reuters and The Wall Street Journal outlined Sazerac’s interest in a deal with Brown-Forman. Yesterday, the business news outlets said Sazerac had made a bid for Brown-Forman of $32 a share, which values the El Jimador Tequila maker at around $15bn.
At the close of trading yesterday, Brown-Forman’s shares stood at $29.60. Before reports of its talks with Pernod first emerged, the company’s shares closed Wednesday 25 March at $23.49.
Brown-Forman and Sazerac representatives could not be reached for comment outside of normal US office hours. Sazerac declined to comment last week when the reports of interest in a deal with Brown-Forman first emerged.
Analysts at Barclays have said a deal between Brown-Forman and Pernod would see the combined entity leapfrog Sazerac and make the new business “a clear number-two player” in the US behind Diageo.
In Pernod’s fiscal third quarter, which ran to the end of March, the company’s net sales fell 14.6%. On an organic basis, they inched up 0.1%. Third-quarter volumes increased 4%.
For the first nine months of the financial year, net sales were down 14.8% and by 4.4% organically.
