Spirits companies Pernod Ricard and Brown?Forman Corporation are in talks about a potential merger amid a slowdown in the alcohol market.
While a deal is not imminent, a joint statement confirmed that talks have been serious. It would unite the world’s second-largest spirits maker with the ?largest producer of American whiskey.
Paris-based Pernod Ricard, owner of Chivas Brothers Scotch whisky and the Glenlivet, is the bigger and broader of the two, but Brown-Forman has one of the world’s most recognisable brands in Jack Daniel’s.
As news of the potential deal emerged shares in Brown-Forman, which has a market capitalisation of about $11 billion, rose nearly 9%, while those of Pernod, with a market value of about €16bn fell nearly 6%.
Both companies have announced restructuring plans, including job cuts at Brown-Forman as consumers tighten their belts and switch to non-alcoholic alternatives.
The statement said: “If agreed and subject to customary approvals, this partnership would be akin to a merger of equals, drawing from the talent and expertise of both companies, and creating value for shareholders of both companies.”
Pernod Ricard added that “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.
“Operational synergies would be significant, leveraging Brown-Forman’s iconic brands, including Jack Daniel’s, and Pernod Ricard’s global distribution strength and exposure to highest growth potential markets.’
Brown-Forman said: “We note the recent market rumours regarding a potential business combination involving Brown?Forman and Pernod Ricard. Brown?Forman regularly explores and evaluates strategic opportunities, and can confirm it is engaged in discussions with Pernod Ricard.”
Pernod Ricard’s consolidated sales amounted to €10.96 billion in the last financial year.
Brown?Forman’s portfolio includes The Glendronach, Glenglassaugh, Benriach, Diplomático Rum, Gin Mare, Fords Gin, Chambord, and Slane.
Net sales for the nine months ended 31 January increased 2% to $1.1bn (+1% on an organic basis) compared to the same prior-year period.
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