Tara Lachapelle is a Bloomberg Gadfly columnist covering deals. She previously wrote an M&A column for Bloomberg News.

Brown-Forman Corp.'s controlling family and management may feel vindicated by the whiskey company's first-quarter results posted on Wednesday morning. It doesn't change the fact that they may have missed a good opportunity for a buyout.

Brown-Forman is valued at about 20 times estimated Ebitda, versus a five-year average ratio of 17. A deal here would have translated into one of the industry's highest takeover valuations.
Source: Bloomberg

The maker of Jack Daniel's returned to growth on a GAAP basis in the period ended July 31, aided by a surge in sales to emerging markets, as well as the strong performance of its Woodford Reserve whiskey and Herradura tequila brands. Brown-Forman also raised its earnings projection for the remainder of the fiscal year as it launches Jack Daniel's Tennessee Rye and continues to emphasize ready-to-drink beverages. 

It's a way for management to say, see, we're still growing nicely -- even as, by its own admission Wednesday, the competition intensifies in developed markets and emerging-market economies remain volatile. 

Clap Back
Brown-Forman's sales jumped in the latest quarter, after the family-controlled company was said to have spurned a takeover offer from Constellation Brands
Source: Bloomberg
Note: GAAP calculation. Doesn't adjust for company's estimate of net change in distributor inventories, impact of foreign exchange or acquisitions and divestitures.

It was reported in May that liquor-and-beer giant Constellation Brands Inc. approached Brown-Forman about an acquisition, but Brown-Forman wasn't interested in selling itself. Chairman Geo. Garvin Brown IV, a descendant of the company's founder, quickly released a statement with longtime CEO Paul Varga (who started as an intern in 1986) that shut down any speculation of a deal:

For nearly 150 years, the company and the Brown family have been committed to preserving Brown-Forman as a thriving, family controlled, independent company. That commitment is unchanged.

It's the family's prerogative, and minority investors certainly shouldn't hold out hope for any deal now or in the future. But considering where Brown-Forman's share price shot up to on the May speculation, where the shares trade now and where analysts see them heading, they may have missed the boat to sell at the top -- and to a buyer known to be willing to preserve a brand's culture. It's the same reason I've said Jim Koch should consider selling Boston Beer Co. to Constellation Brands. 

Losing Interest
Analysts have turned more bearish on Brown-Forman, which is now trading above their average price target of $50.25 a share
Source: Bloomberg

Constellation has plenty of other deal options and its own stock hit a record high Wednesday. But Brown-Forman may not be able to keep this growth up or command such a rich takeover premium again. Food for thought.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Tara Lachapelle in New York at

To contact the editor responsible for this story:
Beth Williams at