Comment

Constellation Brands and Brown-Forman? Keep it in the family – Editor’s Viewpoint

Most popular

Should Pernod dump wine, bunk up with Brown-Forman

Why Brown-Forman will be one of spirits' winners

The future of cannabis in the drinks industry

Retaliatory tariffs "wild card" for Brown-Forman

MORE

Has someone got their cheeky hat on, or has Constellation Brands got a bit too big for its boots? Yesterday's reports linking Constellation with Brown-Forman can only be one of these two, and I think I know which one it is.

The likelihood of Constellation Brands being keen on buying Brown-Forman is slim, argues just-drinks editor Olly Wehring

The likelihood of Constellation Brands being keen on buying Brown-Forman is slim, argues just-drinks editor Olly Wehring

Late yesterday, CNBC reported that Constellation has approached Brown-Forman about a possible acquisition. Citing unnamed sources – naturally – the story claims the two sides are not in further discussion over the matter.

The smoke to this fire can be seen in Brown-Forman's share price this week, which started rising on Monday morning from Friday's close of US$53.65 per share to a Tuesday high of $58.99. As the story emerged yesterday, shares broke $60, before dropping back to a more usual $54.31 at the close.

What do you reckon, then? A likely story?

For me, this all seems a trifle unlikely. Constellation has been going gangbusters in recent years as it surfs the imported beer wave in the US. Indeed, a company that was previously best-known for its wine portfolio is more commonly considered a brewer today.

Why add more spirits to the mix, when beer is providing the group with so much joy?

Of course, Constellation has previous in the M&A arena. Earlier this century, there was a point – several, actually – when it was nigh-on impossible to gauge the group's organic performance quarter-to-quarter, as the acquisitions (predominantly in wine) came so thick, so fast.

This gives at least some credence to yesterday's report. But, for me, it's blown out of the water by this:

In Brown-Forman's 2016 proxy statement (it's on p58), a breakdown of the group's ownership structure reveals that over 65% (67.4%, to be precise) of Brown-Forman shares are owned by … the Brown family. Among the varied Brown family groups in the stockholding record, the bulk of them have "agreed in principle to act together for the purpose of holding and voting certain shares of Class A common stock".

The greater likelihood, then, is that Constellation – as does every other drinks company – has run the rule over what rivals it has out there, and someone walked past the room as the Brown-Forman slide was displayed.

Does this equate to a keenness to acquire? Not of a company as family-run as Brown-Forman


Related Content

Was Brown-Forman ever on the cards? The future of M&A for Constellation Brands - Analysis

Was Brown-Forman ever on the cards? The future of M&A for Constellation Brands - Analysis...

How did Brown-Forman perform in its fiscal-2019 Q1? - results data

How did Brown-Forman perform in its fiscal-2019 Q1? - results data...

Brown-Forman Performance Trends 2013-2017 - results data

Brown-Forman Performance Trends 2013-2017 - results data...

Is Brown-Forman putting too many eggs in one basket? - Comment

Is Brown-Forman putting too many eggs in one basket? - Comment...

Oops! This article is copy protected.

Why can’t I copy the text on this page?

The ability to copy articles is specially reserved for people who are part of a group membership.

How do I become a group member?

To find out how you and your team can copy and share articles and save money as part of a group membership call Sean Clinton on
+44 (0)1527 573 736 or complete this form..



Forgot your password?