A deal that would have combined the world's second-largest spirits maker with the maker of Jack Daniel's just fell apart.
Pernod Ricard and Brown-Forman ended merger talks Tuesday, leaving the Brown family back in charge - and a rival U.S. bidder still circling.
The two companies confirmed they were in talks last month. Pernod Ricard, the French parent of Absolut and Jameson, and Brown-Forman (BF.B), the Kentucky maker of Jack Daniel's, were trying to put together a tie-up that would have reshaped the spirits industry.
They couldn't get to terms.
A Pernod spokesperson told Reuters the decision was "mutual" and reflected a "combination of elements" tied to debt structure and economics, not one big issue.
Brown-Forman shares fell about 5% in extended trading.
Pernod Ricard is the world's second-largest spirits maker, and Brown-Forman is the largest producer of American whiskey, so combining them would have created a global whiskey, vodka, gin, and tequila powerhouse.
For the Brown family, which has controlled Brown-Forman since 1870, the Pernod deal had a softer landing. It mixed cash and stock and would have let the family keep a meaningful stake and some influence in the combined company.
Sources told Reuters the Brown family actually preferred the Pernod offer to a rival bid from American spirits group Sazerac, which is privately held and controlled by the Goldring family. Sazerac owns Corazon tequila and Svedka vodka.
Sazerac came in with about $15 billion, or $32 per share - all cash, with higher leverage. Industry advisers said that structure would have effectively forced the Brown family to give up control.
Even the family-friendly version with Pernod couldn't get over the financial gap.
Pernod Ricard said it remains "fully focused and confident in its strategy and operating model." Brown-Forman said it will focus on "strategic and operational priorities," including "unlocking future growth by expanding our geographic footprint."
That last line is key. Brown-Forman has been trying to push more aggressively into international markets where U.S. whiskey is still gaining share, and the Pernod deal would have done that overnight.
Sazerac is still in the picture, with its bid on the table even if the Brown family doesn't like the terms. The next move belongs to Brown-Forman's board - and to the family that owns it.
