Pernod, Jack Daniel’s Maker Brown-Forman in Merger Talks

Louisville, Kentucky – Pernod Ricard SA and Brown-Forman Corp., the owner of Jack Daniel’s whiskey, are engaged in merger discussions as the alcoholic beverage industry seeks consolidation amid a downturn. The companies confirmed an earlier report by Bloomberg News, stating that the potential partnership would be akin to a merger of equals, drawing on the talent and expertise of both organizations and creating value for shareholders.

Financial Overview​

• Brown-Forman Corp. market capitalization: Approximately $11.8 billion
• Pernod Ricard SA market capitalization: €15.1 billion ($17.4 billion)

Deal Details​

The contemplated transaction involves a significant stock component. Family owners of both companies are likely to contribute substantial stakes to the new entity. A deal is currently anticipated to be finalized within a few weeks. JPMorgan Chase & Co. analysts suggest that any agreement would likely be structured around stock, allowing the Brown family to maintain a significant ownership position. Brown-Forman’s enterprise value is currently estimated at $14.7 billion.

Company Profiles​

Brown-Forman, based in Louisville, Kentucky, is known for its portfolio including Jack Daniel’s, Fords Gin, and Herradura tequila. The company has experienced softer demand for premium liquors in the US. Pernod, headquartered in Paris, is a leading European beverage company with brands such as Absolut vodka, Havana Club rum, and Jameson whiskey. Pernod has been expanding its presence in spirits categories like bourbon and tequila through acquisitions, including a majority stake in Código 1530 Tequila in 2022 and an investment in flavored whiskey maker Skrewball the following year.

Market Reaction​

Shares of Brown-Forman surged on Thursday, rising as much as 21% to a record intraday high, before closing up 9.6% at $25.74. Pernod’s shares closed down 5.7% in Paris, for a market capitalization of €15.1 billion.

Industry Challenges​

Both companies are navigating challenging market conditions. Brown-Forman is grappling with US tariffs and weakened demand, particularly in Canada, where sales have fallen approximately 60% in the three months through October. Pernod has faced headwinds due to trade tensions, particularly the restrictions on duty-free cognac sales in China, and rising competition from cannabis and the impact of GLP-1 weight loss drugs on consumer behavior. Over the past 12 months, Pernod’s shares have declined by more than a third, reflecting weaker demand in the US and China, with Martell cognac experiencing particular difficulties.