Brown-Forman Selling Southern Comfort & Tuaca to Sazerac for $543.5 Million

In a seismic shift in the flavored whiskey category, Brown-Forman is selling the 142 year old Southern Comfort brand as well as Tuaca, to Sazerac for $543.5 million. In a way, it’s a homecoming for Southern Comfort. The original concoction was created in 1874 by bartender Martin Wilkes Heron in a tavern located in the French Quarter of New Orleans, the city that’s the corporate headquarters for Sazerac.

The Wall Street Journal reported that in the six months ended Oct. 31, sales volumes of Southern Comfort brands fell 11%. Brown-Forman said Southern Comfort was hurt by competitive pressure from new flavored whiskeys.

Brown-Forman has marketed Southern Comfort since acquiring the brand in 1979. The company acquired Tuaca in two transactions, completing the purchase in 2002. Brown-Forman also owns iconic brands like Jack Daniel’s, Woodford Reserve, Finlandia, Korbel, el Jimador, Herradura and Early Times.

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Brown-Forman Chief Executive Officer Paul Varga said the decision to sell these brands reflects the company’s evolving portfolio strategy and a continuation of its efforts to focus resources on its highest strategic priorities. Brown-Forman has actively managed its portfolio over the last decade by developing, acquiring and divesting specific brands and categories with the aim of improving the growth and value creation prospects for its business.

Sazerac Company President and CEO Mark Brown said, “We are very excited about the opportunity to acquire such iconic brands. 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.”

Sazerac is one of New Orleans’ oldest family owned, privately held companies. Sazerac is an independent, American family owned company and owns distilling companies – Buffalo Trace Distillery, A. Smith Bowman, Glenmore Distillery, Barton 1792 Distillery, Fleischmann, Medley and Mr. Boston.

The sale of these brands is expected to close by March 1, 2016 resulting in a one-time operating income gain for Brown-Forman of approximately $475 million in fiscal 2016. The transaction, which is subject to regulatory clearance in the U.S. and customary closing conditions, will be discussed in further detail during Brown-Forman’s March conference call following the issuance of its third quarter earnings release.

Goldman, Sachs & Co. and Gibson, Dunn & Crutcher LLP advised Brown-Forman in this transaction. Cooley LLP provided legal advice to Sazerac. Wells Fargo Securities provided Sazerac financial advice and led the committed financing for the transaction.