Sazerac’s $15B Bid Intensifies Takeover Battle for Brown-Forman — What Does It Mean for BF.B Stock?

U.S. private spirits giant Sazerac has offered to acquire rival Brown-Forman (BF.B), one of the world’s largest spirits and wine companies, for $15 billion, according to multiple media reports.

BF.B stock rose about 3% early Thursday following the news, even as analysts have laid out a bullish case for a potential takeover of the Jack Daniel’s maker.

According to the Wall Street Journal, which first broke the news, the offer amounts to $32 a share. This represents an 8.2% premium to Brown-Forman’s closing price of $29.57 on Wednesday.

Sazerac, Pernod Ricard Battle for Brown-Forman

The bid from Sazerac, which joined the takeover race earlier this month, puts to the test efforts by French spirits giant Pernod Ricard (PDRDF) to merge with Brown-Forman. This comes as Brown-Forman late last month confirmed that it was indeed engaged in acquisition discussions with Pernod Ricard.

The Kentucky-based company noted that if an arrangement is agreed upon with the Jameson maker and clears regulatory hurdles, it “would be akin to a merger of equals, drawing from the talent and expertise of both companies, and creating value for shareholders.”

The acquisition interest comes as U.S. tariffs have heaped pressure on alcohol companies, creating worries about demand. However, Brown-Forman last month reaffirmed its forecast for sales this year, even as it beat analysts’ estimates for its third-quarter revenue.

What Analysts Think of a Brown-Forman Merger

Lately, analysts lifted their ratings on BF.B, noting upside from a potential merger. For instance, Citi recently upgraded BF.B from Sell to Hold, noting that the whiskey maker holds “transformational merger potential.” The banking giant’s analyst Filippo Falorni on Wednesday further reaffirmed the Hold rating and set a price target of $31, implying about 5% upside.

JPMorgan analyst Drew Levine also recently made the exact rating move, noting that a prospective merger-and-acquisition deal will support Brown-Forman shares for now as pressure remains on its finances. However, while Levine raised the price target on BF.B from $25 to $27, this implies about 9% downside risk.

Is BF.B Stock a Buy?

Across Wall Street, Brown-Forman’s shares remain a Hold based on analysts’ consensus rating. This breaks down to one Buy, seven Holds, and two Sells issued over the past three months.

Moreover, the average BF.B price target of $27.94 implies about 6% downside potential.