New Orleans-based Sazerac Co. will buy the Southern Comfort and Tuaca alcohol brands from Brown-Forman Corp. for $543.5 million.
Mark Brown, president and chief executive officer of Sazerac, said the family-owned, privately held company is excited to add “such iconic brands” and looks forward to “years of successful brand building.”
The deal is expected to close March 1. It will result in a one-time operating income gain of about $475 million for Brown-Forman fiscal 2016, the company said.
Brown-Forman acquired Southern Comfort in 1979, but the brand has struggled in recent years. The company launched marketing campaigns to try to reinvigorate the brand. It completed its purchase of Tuaca in 2002. Tuaca is a relatively small premium liqueur brand.
Sazerac’s brands include Buffalo Trace and Old Rip Van Winkle bourbons and Fireball Cinnamon Whiskey.
For the Southern Comfort brand, the deal marks a bit of a homecoming: The recipe — originally called “Cuffs & Buttons” — was crafted in 1874 by a bartender named M.W. Heron, who worked at the long-gone McCauley’s Saloon in the French Quarter.
Heron’s customers at McCauley’s were “looking for something a little smoother than straight whiskey and bourbon,” according to Brown-Forman.
Brown-Forman CEO Paul Varga said the sale reflected the Louisville, Kentucky-based company’s evolving portfolio strategy and its focus on top-priority brands. Brown-Forman’s dominant brand is Jack Daniel’s Tennessee Whiskey.
Last month, Sazerac dropped a trademark infringement lawsuit against Jack Daniel’s over the use of “Fireball” in online ads for cinnamon-flavored Jack Daniel’s Tennessee Fire.
Sazerac gave no explanation for dropping the lawsuit, other than saying the companies had reached an agreement.
Brown-Forman said last month that net sales for the Southern Comfort brand had dropped by 7 percent in the first half of the company’s fiscal year. The company pointed to weak sales at bars and restaurants, and competition from new, flavored whiskies.
Southern Comfort sales are divided about evenly between the U.S. and overseas markets. Its leading international markets include Europe and Australia.
Tuaca is mostly sold in the U.S. but has a market in the United Kingdom as well.
Sazerac is one of New Orleans’ oldest family-owned companies. In addition to its New Orleans operations, Sazerac has locations in Frankfort, Bardstown, Louisville and Owensboro, Kentucky; Fredericksburg, Virginia; Carson, California; Baltimore; Lewiston, Maine; Manchester, New Hampshire; and Montreal.
Cooley LLP provided legal advice to Sazerac. Wells Fargo Securities provided Sazerac financial advice and led the committed financing for the transaction.