Heirs to the Jack Daniel's fortune are reportedly engaged in a significant family dispute, coinciding with a $15 billion hostile takeover bid for the spirits maker Brown-Forman. Two brothers, W.L. Lyons Brown III and Stuart Brown, have issued a seven-page letter to more than 130 Brown clan members criticizing company leadership and the board for underperformance.
The brothers stated in the July 10 missive that Brown-Forman's stock price has dropped from the mid-$70s to the mid-$20s per share over the past three years, resulting in billions of dollars in lost generational wealth for the family and other shareholders. They accused the board of "rewarding failure."
This internal conflict emerges as Brown-Forman, the 156-year-old company behind Jack Daniel's and Woodford Reserve, faces an unsolicited $15 billion cash offer from Sazerac, the family-owned producer of Buffalo Trace bourbon. The company's CEO, Lawson Whiting, is also slated to depart once a successor is identified, amid stalled sales and internal divisions.
At the heart of the dispute is W.L. Lyons Brown III, who previously left Brown-Forman in 2002 after a disagreement with his uncle, then-CEO Owsley Brown II. Lyons Brown has since launched his own beverage ventures.
The dissident brothers' letter also questioned the company's handling of potential merger talks with French spirits giant Pernod Ricard and expressed skepticism about the company's strategic direction for Jack Daniel's, likening its numerous flavor variations to Baskin-Robbins.
Descendants of founder George Garvin Brown maintain control of the publicly traded company through over 70% of its voting Class A shares. The family investment vehicle, Wolf Pen Branch, which consolidates voting power for many family members, holds about 60% of the shares independently, giving it significant influence.
Wolf Pen Branch has rejected Sazerac's takeover proposal, deeming it misaligned with their long-term vision for Brown-Forman. The company's board also deemed the offer "not actionable." However, Sazerac directly appealed to Brown family shareholders on July 24, asserting its offer represented a 40% premium over Brown-Forman's recent trading price.
Brown-Forman's stock has declined approximately 60% over the past five years, attributed in part to weakening demand for its spirits. The company reported $3.9 billion in sales for its latest fiscal year, with a 18% decrease in net income. Last year, the company laid off 12% of its approximately 5,400 employees and closed its Louisville cooperage.
Marshall Farrer, a fifth-generation descendant and the current chairman, is attempting to foster family unity amidst these mounting pressures. The family previously established a "Family Constitution" to guide its long-term growth and independence, emphasizing trust and respect among relatives, a pledge now being tested by the current turmoil.