Drink up!

            With the recent sale of the Beam Corporation (NASD: BEAM) I thought it might be fun to explore another spirits conglomerate.  Have you heard of this little alcoholic beverage named Jack Daniel’s?  Sure you have!  Brown-Forman (NYSE: BF-A) is the proud owner of Jack Daniels, Southern Comfort, Finlandia Vodka, Woodford Reserve Bourbon, Old Forester, Korbel Champagne and Chambord.

            Old Forester is officially the oldest running bourbon on the market today.  As of 2013, it is 142 years old!  It was first bottled and marketed in 1873 by a pharmaceutical salesman turned bourbon merchant named George Garvin Brown (family descendants still run the company).  During Prohibition Old Forester was one of ten brands that were lawfully produced (for medicinal purposes). 

            Jack Daniel’s had a net income of $121M (FY 2013) all by its lonesome.  Because Brown-Forman has a market value of about $18B, it is worth talking about them as a takeover target from larger firms such as Diageo (NYSE: DEO), who own such brands as Johnnie Walker, Crown Royal and Guinness Stout.  Diageo is valued around $80B and has about $40B in total assets ($13B in current assets).  I personally think that Diageo would benefit from buying Brown-Forman and adding their products to their already stout (no pun intended) portfolio of products.  Although someone like Anheuser-Busch InBev  (NYSE: BUD) is a $160B monster with $122B in total assets, they are a straight beer company.  Maybe they would like to expand into spirits? 

            Either way, Diageo and Anheuser-Busch InBev have enough clout and capital to rip Brown-Forman from the public marketplace in a pinch.  Do we buy BF-A based off of their strong product line, which has been proven for nearly a decade and a half? Are they a buyout target for such larger companies as Diageo or BUD?  Maybe it’s both and we should ride Jack Daniel’s to the motherland!