The billionaire heirs to the Jack Daniel’s fortune are reportedly embroiled in a bitter family feud — with a pair of rebel brothers blasting their relatives and company brass as a $15 billion hostile takeover bid looms over the storied whiskey maker.
More than 130 members of the Brown clan received a seven-page broadside from W.L. Lyons Brown III and his brother Stuart Brown accusing the board of Brown-Forman, which owns Jack Daniel’s, of “rewarding failure” as the company’s shares have lost roughly 60% of their value in recent years.
“The numbers are stark and undeniable,” the bourbon bros wrote in the July 10 missive, according to the Wall Street Journal.
“Brown-Forman’s stock price has fallen from the mid-$70s per share to the mid-$20s per share over the past three years, eliminating billions of dollars of generational wealth for the Brown family and all other shareholders.”
The family revolt has erupted as Louisville-based Brown-Forman — the 156-year-old company behind Jack Daniel’s and Woodford Reserve — fends off an unsolicited $15 billion cash offer from crosstown rival Sazerac, the family-owned maker of Buffalo Trace bourbon.
CEO Lawson Whiting is also headed for the exits as sales have stalled and the Brown clan — whose collective fortune Forbes has put at $11 billion — squabbles over the future of the family empire.
At the center of the drama is Lyons Brown, 66, a colorful fifth-generation heir who was pressured to leave Brown-Forman in 2002 following a clash with his uncle, then-CEO Owsley Brown II, according to the Journal.
Lyons Brown once reportedly ruffled feathers by flipping an organizational chart upside down at a sales meeting and urging employees to challenge conventional wisdom.
Lyons Brown later started his own booze business, competing against the family company, and co-founded a now-defunct honey venture that touted “low-disturbance” beekeeping.
“The letter speaks for itself,” Lyons Brown told the Journal.
Now he and his brother are targeting the relatives who wield power over Brown-Forman.
Their broadside accused the board and other family members of keeping shareholders in the dark about failed merger talks with French liquor giant Pernod Ricard and questioned why the company entertained that deal while rebuffing Sazerac.
“If the Pernod Ricard transaction was Plan A, what is Plan B? The Company is in crisis,” the brothers fumed in their missive.
They also skewered the strategy for Jack Daniel’s, comparing the iconic Tennessee whiskey to Baskin-Robbins because it is sold in so many flavors.
The descendants of founder George Garvin Brown still control the publicly traded company through more than 70% of its voting Class A shares.
Wolf Pen Branch, a family investment vehicle formed to unify the sprawling clan’s voting power, controls about 60% of the shares by itself — effectively giving it the power to block a sale.
Lyons and Stuart Brown never joined Wolf Pen, leaving the dissident brothers with limited sway unless they can persuade other relatives to join their revolt.
Wolf Pen has already rejected Sazerac’s takeover proposal, saying it did not align with its members’ vision for Brown-Forman’s future. The company’s board subsequently said the offer wasn’t “actionable.”
But Sazerac appealed directly to Brown family shareholders on July 24, saying its offer represented a 40% premium to Brown-Forman’s recent trading price.
“Our offer remains open and our conviction is only enhanced,” Sazerac wrote.
Three days after the Brown brothers circulated their letter, Whiting told the board he would step down once a successor is found.
The turmoil comes as Brown-Forman battles weakening demand. The company reported $3.9 billion in sales for its latest fiscal year while net income fell 18%, according to the Journal.
The company also laid off 12% of its roughly 5,400 employees last year, and closed its Louisville cooperage.
Trying to keep the clan together is chairman Marshall Farrer, 55, a fifth-generation descendant and the 10th Brown family member to hold the title.
The family once printed a “Family Constitution” on bottles of Old Forester pledging “long-term growth and independence through the family’s control” and “trust, respect and diplomatic candor” among relatives.
That pledge is now getting jolted as jarringly as a couple shots of Jack’s without a chaser.
“Sometimes you think of the Southern company that’s very nice and generous with each other,” Farrer told shareholders in July. “There’s a lot more toughness going on.”