Sazerac Wants Another Shot at Jack Daniel’s Maker Brown-Forman
Letter from BuzzBallz maker asks members of Brown family to reconsider previously rejected $15 billion takeover proposal
- Sazerac sent a letter to Brown-Forman shareholders asking them to reconsider its previously rejected $15 billion buyout offer.
- Brown-Forman and a group of Brown family shareholders issued a joint statement brushing off Sazerac’s unsolicited proposal.
- Sazerac said its $32-a-share bid has backing from Wells Fargo and Apollo Global Management, and it is ready to improve the terms.
Sazerac isn’t taking no for an answer.
The maker of BuzzBallz cocktails and Buffalo Trace bourbon has sent a letter to a group of Brown-Forman BF.B 1.48%increase; up pointing triangle shareholders asking them to reconsider a $15 billion buyout offer that had been rebuffed. The group—Class A shareholders—includes members of the Brown family, descendants of the company’s founder who currently control its voting power.
Sazerac’s appeal to investors adds pressure on Brown-Forman managers, who are trying to boost the performance of the company behind brands such as Jack Daniel’s whiskey, Woodford Reserve bourbon and Herradura tequila. Brown-Forman Chief Executive Lawson Whiting announced plans earlier this month to step down once a successor is named.
Brown-Forman and Wolf Pen Branch, a collection of Brown family members who own the majority of Class A shares, issued a joint statement that brushed off Sazerac’s unsolicited proposal. “We are confident in the strength and competitive position of the business, and believe the company is well-positioned to deliver long-term value for all shareholders,” Wolf Pen Branch said in the statement.
Family-owned Sazerac sent an offer to Brown-Forman’s board on May 1 to acquire the company for $32 a share in cash, according to the Friday letter viewed by The Wall Street Journal. The proposal provided a 37.9% premium for Class A shares and a 40.4% premium for Class B shares, as of March 24, according to the letter signed by Sazerac Executive Chairman Mark Brown and Chief Executive Jake Wenz.
Brown-Forman Class A shares closed at $26.71 on Friday, giving the company a market value of some $12 billion. Class B shares closed at $26.08.
Sazerac’s letter said the bid had the backing of Wells Fargo and Apollo Global Management, confirming an earlier Journal report, and additional interest from banks to support the deal.
The letter said the deal would allow Brown-Forman investors to roll over shares into a company with “significant upside” and a higher dividend payout than the current offering.
The combined company would be the U.S. market leader in spirits sales and the world’s second-largest behind Diageo, the letter said.
Since submitting its proposal Sazerac has tried to engage with Brown-Forman’s board but has yet to have substantive discussions, the letter said. “Our offer remains open and our conviction is only enhanced,” it said. The letter added that Sazerac “stands ready to improve the terms of our offer” if Brown-Forman’s board engages on the matter.
The letter went out to shareholders just after the annual Brown-Forman shareholder meeting, held Thursday in its hometown of Louisville, Ky. Nonfamily shareholders and Brown family members alike were in attendance.
Both Brown-Forman and Sazerac are based in Louisville. Sazerac is owned by William Goldring and his family, representing the third and fourth generations of Sazerac family ownership.
Sazerac reported sales of $6.6 billion in the 12 months through March. Brown-Forman had just nearly $5.1 billion in sales in the year ended April 30.
Brown-Forman had earlier been in talks to combine with Absolut vodka maker Pernod Ricard in a deal that included a large stock component. Those talks faltered in late April, a decision Pernod said was mutual and related to differences over deal structure and economics.