Pernod Ricard: failure of discussions to buy the owner of Jack Daniel’s

The wine and spirits group “remains fully focused and confident”. But Pernod Ricard announced this Tuesday the failure of discussions to buy its American competitor Brown-Forman, owner among others of the Jack Daniel’s whiskey brand.

“These discussions ended and did not result in an agreement, as the companies were unable to mutually agree on terms,” the group wrote in a statement.

These negotiations were announced at the end of March, with Brown-Forman referring to “a merger of equals”, although Pernod Ricard is a much larger group. The two giants are respectively valued at more than 15 billion euros for Pernod Ricard and around 12 billion dollars for Brown-Forman. According to press information, another buyer is in the running, the American Sazerac. This other spirit group has never commented.

Gloomy context

Discussions regarding a merger took place in a gloomy context for alcoholic beverages around the world, with declining consumption particularly among young people and an increase in customs duties, particularly in the United States. The latter particularly affected Pernod Ricard.

Pernod Ricard saw its turnover decline by 14.6% in the 3rd quarter of its staggered financial year, still penalized by its sales in China and the United States, and is reviewing its objectives due to the war in the Middle East. The wine and spirits giant now anticipates a drop of 3 to 4% in its annual organic turnover (constant exchange rates and scope), due to the ongoing conflict in the Middle East.

To defend its margin, the group is implementing a savings reduction program of one billion euros over three years, in logistics, purchasing, manufacturing and organization (particularly human resources, including via disposals).