Jay-Z and Bacardi Reach Deal After Legal Battle Over Multibillion-Dollar Cognac Brand
Jay-Z and Bacardi announced on Friday that they reached a long-term agreement for their partnership with D’Ussé Cognac. The two parties were vague about the details but Bacardi is said to have acquired a majority interest in the multibillion-dollar brand from Jay-Z. Additionally, he will retain a significant ownership stake in the brand.
The 50/50 partnership between Jay-Z and Bacardi started back in 2012.
Jay-Z said, “Growing D’USSÉ over the past decade from an idea to one of the fastest-selling spirits in history has been a blessing. The next phase of this journey will further cement D’USSÉ’s legacy as one of the world’s most respected brands. I am excited to renew this partnership with Bacardi.”
In a statement to Bloomberg Law, Bacardi said, “We have deep respect for [Jay-Z’s] creativity and business acumen and are proud of our accomplishments in establishing D’Usse as a leader in an exciting and competitive category.”
Bacardi taking a majority interest in Jay-Z ownership would suggest they bought out at least 25.01% of the Cognac brand for him. This would result in Bacardi owning at least 75.01% of D’Ussé. However, the exact figures have not been released.
The reference to the brand as worth multiple billions suggests Bacardi may have accepted Jay-Z’s team’s evaluation of D’Ussé’s value.
As the details of this case emerged it appeared the dispute between Jay-Z’s company SC Liquor LLC and Bacardi’s subsidiary, Empire Investments Inc. revolved around how much D’Ussé was actually worth.
Jay-Z’s team evaluated the Cognac brand as being worth at least 3 billion. Jay-Z must have been confident in this evaluation because court documents show he offered Bacardi 1.5 billion to buy out their 50% stake. This offer was rejected.
Interestingly, Bacardi’s team evaluated the brand as being worth just $460 million and despite this much lower value still did not accept Jay-Z’s offer which was over three times the value of the company.
The series of events suggest that when Bacardi rejected the offer, Jay-Z decided to sue in order to open the books on the business and get to the bottom of how much D’Ussé was actually worth. SC Liquor suspected that Empire Investments Inc. was attempting to drop the value of the brand in order to avoid paying its worth.
In the end, the press release acknowledged that D’Ussé is worth billions. Therefore, it is possible Jay-Z made as much as $750 million off of the deal if only 25.01% of his stake was acquired. More details may become available as the deal becomes finalized.
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