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Brown-Forman Rejected $15 Billion—Was That A Huge Mistake?

Brown-Forman Corporation, the family-controlled owner of Jack Daniel’s, Woodford Reserve and Old Forester, has become the centre of a high-stakes takeover battle after rejecting a $15 billion proposal from Sazerac. The privately held maker of Buffalo Trace, Fireball and BuzzBallz offered $32 per share in cash, representing premiums of 37.9% for Brown-Forman’s Class A shares and 40.4% for its Class B shares based on March 24 prices. Sazerac has since appealed directly to the controlling Brown family shareholders and indicated that it could improve the offer if the board agrees to substantive discussions. The timing is significant. Brown-Forman has strong brands, a healthy balance sheet and substantial free cash flow, but it is also navigating flat sales, weaker spirits consumption in developed markets, margin pressure and an upcoming CEO transition.