Brown-Forman shares climb nearly 7% on merger talks with French spirits giant Pernod Ricard

Shares of Brown-Forman Corp. climbed nearly 7% on Friday, extending previous day’s rally sparked by the announcement that Pernod Ricard SA and the owner of Jack Daniel’s are in merger discussions.

The French spirits giant, Pernod Ricard, which holds a market valuation of €15.9 billion ($18.3 billion), and the Louisville, Kentucky-based Brown-Forman, valued at $12.3 billion, confirmed in statements that they are exploring a combination.

The proposed transaction includes a substantial stock component, according to Bloomberg.

Stock Market Reaction

At 1:55 pm Eastern Time, Brown-Forman’s Class B shares were trading at $27.42, up by $1.64, or 6.36%, in New York.

On Thursday, the stock closed 9.6% higher. Despite this recent momentum, the stock remains roughly two-thirds below its 2021 peak.

Shares of Pernod gained as much as 4.5% in Paris on Friday. The stock had closed nearly 6% down on Thursday.

‘Merger Of Equals’

A successful merger would unite Pernod’s flagship labels, such as Martell Cognac, Jameson Irish Whiskey, and Absolut Vodka, with Brown-Forman’s portfolio, which includes Fords Gin and Herradura tequila. The move would also join two families with storied histories in the beverage industry in what has been described as a “merger of equals.”

The Ricard family, which established the French firm in 1975 by merging Pernod and Ricard, remains a significant shareholder. Similarly, Brown-Forman’s legacy dates to 1870, with descendants of founder George Garvin Brown still maintaining a controlling interest.

Both families would likely transition their large stakes into the newly formed entity, with a final agreement potentially weeks away, reported Bloomberg.

While Brown-Forman’s owners have historically been reluctant to sell, analysts at JPMorgan Chase & Co. suggested that Pernod’s own family-led structure could facilitate a deal.

“We would assume that any deal would be stock-based, which would allow the Brown family to maintain a significant ownership stake and share in potential longer-term upside,” the analysts wrote.

The combination would establish a dominant leader in American whiskey and bolster Pernod’s standing in the tequila segment. Brown-Forman currently ranks as the world's fifth-largest distiller.

Both firms are currently navigating sluggish demand for premium spirits in the United States. Additionally, Brown-Forman has highlighted how US tariffs have hampered international sales due to reciprocal levies. CEO Lawson Whiting noted during a recent earnings call that Canada has experienced the "most significant impact" from these trade disputes, with sales there plunging approximately 60% in the quarter ending in October.

The proposed merger structure may allow both families to retain a voice in governance, helping to mitigate concerns regarding foreign control over an iconic American brand during a period of heightened sensitivity toward cross-border acquisitions.