Wall Street might not be a big believer in the rumored deal that Constellation Brands might look to push a deal for Brown-Forman, which makes Jack Daniel’s. As reported by CNBC and recounted in Fortune, Brown-Forman allegedly said no to Constellation’s attempt to acquire the company, but the latter remains interested in making a deal, said the financial publication. Neither company confirmed talks.
Constellation makes Svedka vodka and other alcoholic offerings. Buying Brown-Forman would boost Constellation’s spirits business, as a fair chunk of the $7.3 billion that is generated in sales comes from the wine and beer, at a respective $2.7 billion and $4.2 billion. The portfolio would get additions of brands such as Woodford Reserve and Old Forester bourbons.
But should a deal go through, the combined entity would sport a $53 billion market cap.
Fortune said that for Wall Street’s part, financing the deal may be tough, with Wells Fargo noting in research that there is wiggle room for Constellation to raise a few billion dollars, but likely only that amount. Brown-Forman is also controlled by the namesake Brown family, and several generations are in place controlling the company. Likewise, Constellation is a wine producer helmed by a CEO who hails from the founding Sands family.
And, noted Fortune, Constellation, which has done bolt-on deals below $1 billion in past years, may be in the hunt even if the Brown-Forman deal does not go through. Fortune notes another possibility floated by the Street, which states that Constellation might split the beer business from wine and sell the former to a beer-focused firm, possibly Molson.
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