Investment bank UBS has downgraded Brown-Forman shares from neutral to sell, saying that it does not expect the drinks firm to strike a deal with Bacardi in the near future.

UBS said yesterday (28 April) that it has reduced its rating on Brown-Forman, owner of the Jack Daniel's whiskey brand, prompting the drinks group's share price to fall by 3.4% to US$44 on the New York stock exchange by the end of the day.

The banking giant said that gains to B-F's share price over the last week had become unrealistic, because it does not consider a deal with Bacardi to be "imminent".

Brown-Forman's (B-F) shares have risen sharply in the second half of April, triggered first by speculation that Diageo might be peparing a bid for the group and then propelled forward by rumours of merger talks between B-F and Bacardi.

B-F and Bacardi have declined to comment on the rumours.

just-drinks understands from a source close to the situation that talks have taken place between the two companies, but a deal is believed to remain a long way off.

Some analysts have said that the deal would make strategic sense, with both firms too small to challenge the might of Diageo and Pernod Ricard as independent entities. Other think that a split in B-F's controlling family could ultimately prevent a deal.

John Wakely, an independent industry analyst formerly of Lehman Brothers, said at last week's World Whiskies Conference that he was sceptical of a deal in the next year.