Brown-Forman Corporation has agreed to sell its Southern Comfort and Tuaca trademarks to Sazerac for $543.5 million (€499.3 million).
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In September, rumors surfaced that Brown-Forman was also mulling the sale of its Chambord liqueur brand.
Brown-Forman acquired Tuaca in 2002.
To view the full article, register now. The deal is expected to close by March 1, and result in a one-time operating income gain of $475 million for Brown-Forman in its current fiscal year.
In the six months ended October 31, sales volumes of Southern Comfort brands fell 11%.
But nothing seemed to give it much traction and now Southern Comfort, the beloved drink of singer Janis Joplin, will join a vast portfolio of labels at the privately held Sazerac.
The sale fits into the company’s strategy of divesting challenged brands and noncore brands such as the wine business it sold in 2007 to focus on Jack Daniel’s and Woodford Reserve, which have grown in recent years behind a surge in American whiskey sales.
Southern Comfort sales are divided about evenly between the US and overseas markets.
Mark Brown, president and chief executive of the Sazerac Company, said: “We are very excited about the opportunity to acquire such iconic brands”.
Brown-Forman has been pressured recently by weakening foreign currencies and rising competition in the U.S.
“Brown-Forman has done an excellent job of building both brands over the years and we are looking forward to many more years of successful brand building”.
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The transaction, which is subject to regulatory clearance in the USA, will be discussed by Brown-Forman in further detail during its March conference call following the issuance of its third quarter earnings release. Sazerac also makes bourbons such as Buffalo Trace and Eagle Rare. The brand is sold mostly inside the USA but does have market across the UK. “We think we can improve their performance, as we’ve done with just about every brand we’ve acquired over the years”, he said.
