Pernod Ricard and Brown-Forman have terminated discussions over a potential merger.
Just over a month after news broke the two giants were in talks to form a transatlantic spirits titan, Pernod revealed late last night that the companies had been “unable to reach mutually acceptable terms”.
“Pernod Ricard remains fully focused and confident in its strategy and operating model, supported by strong and committed teams across the group to deliver sustainable long-term value for all stakeholders,” the Jameson brand owner said.
Brown-Forman added it remained “focused on creating value for all stakeholders by advancing ongoing strategic and operational plans”.
In a note to clients Bernstein analyst Trevor Stirling said the two parties had found it “very challenging” to reach a mutually agreeable deal.
Brown-Forman’s share price rose rapidly after the deal became public knowledge, and a reports of a competing offer from Sazerac pushed up the minimum acceptable bid to a point where Pernod would have needed to “thread the eye of the needle” to find an offer that was also acceptable to its own shareholders, he noted.
“The two companies were stuck between Scylla and Charybdis,” he quipped.
It remains unclear if Brown-Forman intends to continue discussions with Sazerac, following the conclusion of negotiations with Pernod.
“It’s not immediately clear what has proved to be the sticking point(s) in negotiations [with Pernod], but the…statement from Brown-Forman suggests to us that it may be a return to business as usual,” Barclays analyst Lauren Liberman said. “The messaging… seems to us to point towards a focus on normal course operations versus suggesting an appetite to engage in talks with Sazerac.”
Meanwhile, Pernod would need to go “back to the drawing board,” while also explaining to its employees and shareholders why it engaged in discussions with Brown-Forman in the first place,” Stirling predicted.
No comments yet