Pernod Ricard and Brown-Forman have terminated discussions over a potential merger, bringing an end to weeks of speculation around a blockbuster tie-up in global drinks.
Last month, Drinks Retailing reported that the two companies were engaged in talks regarding a possible business combination. However, the two companies have now away after failing to reach “mutually agreeable terms”, Brown-Forman said.
The decision to end negotiations was described as mutual, with reports suggesting disagreements centred on deal structure and valuation. A spokesperson for Pernod Ricard said the move was “in the best interest of our shareholders”.
Brown-Forman, the Kentucky-based owner of Jack Daniel’s, indicated it will now refocus on its long-term strategic priorities.
“We intend to create long-term value for all stakeholders by focusing on our strategic and operational priorities. This includes unlocking future growth by expanding our geographic footprint, continuing to build brands that resonate with consumers and enhancing operational efficiency,” the company said.
The collapse of talks arrives against a challenging backdrop for both companies. Brown-Forman has reported a softer performance in recent quarters, citing sales pressures in the US and trade tensions in Canada, where American alcohol has been removed from shelves in several provinces.
Meanwhile, Pernod Ricard is facing off against a difficult trading environment of its own, (a 3-4% decline in net sales is forecasted for the current financial year). The group’s portfolio includes major international brands such as Absolut vodka and Jameson Irish whiskey.
Market reaction to the news was swift, with Brown-Forman shares reportedly falling more than 6% in aftermarket trading following the announcement.
Industry attention is now likely to turn to the role of spirits group Sazerac, also based in Louisville, Kentucky, which has reportedly tabled a $15bn bid for Brown-Forman. The privately owned business – best known as the owner of Buffalo Trace – has yet to comment publicly on its intentions.
