Brown-Forman, the parent company of Jack Daniel's, confirms merger negotiations with Pernod Ricard

Investing.com - American whiskey giant Brown-Forman (NYSE: BFa) and Pernod Ricard (EPA: PERP) confirmed on Thursday that they are in negotiations for a potential “merger of equals.”

Both companies issued statements confirming earlier media reports that they are engaged in merger talks.

“If an agreement is reached and approved through normal procedures, this collaboration would be similar to a merger of equals,” the companies stated in their respective announcements. They added that the merger would bring “significant” operational synergies.

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Following the announcement, Brown-Forman’s stock rose 2.7% in after-hours trading. The stock had already surged nearly 10% during Thursday’s main trading session.

Pernod Ricard’s stock fell nearly 6% on Thursday.

This merger would combine the world’s second-largest spirits producer with the largest whiskey manufacturer in the U.S., creating the world’s biggest spirits company.

As merger talks unfold, global spirits manufacturers are facing slowing sales and rising costs, as consumers worldwide reduce alcohol consumption for health reasons and due to decreased spending.

Disruptions from U.S. trade tariffs have also hit alcohol imports, while growing threats from emerging sectors (especially the cannabis industry) have weakened alcohol sales.

Both Pernod Ricard and Brown-Forman recently announced restructuring plans, including layoffs.

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