In the aftermath of the acquisition of Beam Inc. by Suntory Holdings Ltd., “conversation inside the spirits industry has shifted to Louisville [Ky.]-based spirits company Brown-Forman,”
Insider Louisville
reported.
Brown-Forman is one of three global spirits brands based in the U.S., along with Sazerac Co., based in Metairie, La., and heaven Hill Distilleries, also based in Louisville, the report noted. Those two companies are privately held, “and therefore not as vulnerable to unsolicited tender offers as publicly traded Brown-Forman,” the article said.
However, the
Insider Louisville
article said, because Brown family members own most of the company’s Class A voting shares, “Brown-Forman is no easy target.” Citing the 2013 proxy statement, the article noted that the Brown family controls about 67% of the Class A voting shares. The report noted:
Experts and insiders tell
IL
that the family is likely to sell only if the strategic financial stars align … if tax advisors and trust advisers convince Brown heirs the time may be right.
The article noted “current activity indicating an imminent sale is
unlikely
.” This evidence includes a renovation of a building, an increase in advertising and nearly $200 million in total capital expenditures from fiscal year 2011 through fiscal year 2013, and projected capital spending between $140 million and $160 million in fiscal year 2014. However, the report pointed out, Beam made major investments before it was acquired by Suntory.
Citing Brown-Forman’s 10-K report filed last June,
Insider Louisville
noted that the company’s fiscal 2013 effective corporate income tax rate was 31.7%, “compared to recent annual effective rates ranging from 13% to 18% for our largest foreign competitors.”
The article said trusts and partnerships control the majority of Brown family blocs of shares at the company.
The spirits industry press is unanimous that Brown-Forman would be a tough company to acquire even for a giant competitor offering the family a tempting premium for their shares.
(Source:
Insider Louisville,
Jan. 23, 2014.)
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