Constellation Brands, the second largest wine producer in the world and the third-largest beer supplier in the United States is said to be interested in Brown-Forman Corporation, maker of the famous Jack Daniels whiskey. The take-over approach became known on Tuesday with CNBC citing people close to the matter. In the last week, Brown-Forman’s Class B non-voting shares gained 12 percent. Class A voting-shares are thinly traded and majority owned by the Brown family in the fifth generation, who founded the company in 1870.
George Garvin Brown, IV, Chairman of the Board of the Brown-Forman Corporation since 2007 and direct descendant of the founder with the same name did not comment on the rumors. Historically the Brown family always declined similar offers.
Since market observers see a mark-up of at least one third of the market capitalization of over $22 billion on Tuesday, Constellation would need to pay about $30 billion for the Louisville, Kentucky-based company.
Despite threads of US-President Donald Trump to impose taxes on goods imported from Mexico, which would severely affect profits (inside.beer, 11.11.2016), Constellation Brands has seen a strong business with better-than-expected quarterly earnings.
Analysts believe that adding the Brown-Forman liquor brands to the Constellation Brands portfolio would add synergies and economies of scale to the business but see only a minor chance for an execution of the deal.