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Editor's Viewpoint - Brown-Forman for Sale? Keep it in The Family

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A few weeks ago, reports broke suggesting that Bacardi is set to embark on a shopping spree to plug the Bourbon gap in its portfolio. Speaking to the Sunday Telegraph in an interview published late last month, CEO Ed Shirley said: “The obvious gap that we have would be in Bourbons and ryes.”

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These comments echo those he made when we spoke to him last year. “It's the American whiskies we have the absences in,” Shirley told deputy editor James Wilmore.

The Sunday Telegraph then ran with this a little, and suggested that, in light of Suntory's move for Beam Inc in January, Bacardi “is lining up a move in the Bourbon market, with Jack Daniels owner Brown-Forman suggested as a possible target”.

Much noise has been made of late about the possibility of a new wave of consolidation in the spirits industry. This is understandable, given that Suntory's purchase of Beam takes the most obvious purchase off the table. Both the media and analyst community are keenly sniffing around for the next big buy, with several suggesting that Brown-Forman is next to be snapped up.

If you're looking at Brown-Forman while licking your lips, then, put simply, you are wasting your time.

Granted, Brown-Forman is publicly-listed in New York; anyone who wants to buy shares, can buy shares.

But, no matter how many shares you buy, you'll still need to win the Brown family over. The clan, which founded the company in 1870, holds around 67% of the Class A shares.

Those are the voting shares, by the way.

Historically speaking, the chances of persuading a family to sell its company, especially when it's profitable and growing, are slim at best.

In this instance, what would be best for shareholders just doesn't match up to what's best for the family.


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