Brown-Forman to buy back $1 billion shares

Brown-Forman has approved a US$1 billion share repurchase programme following the sale of its Southern Comfort and Tuaca brands last month.

The sale of Southern Comfort has allowed Brown-Forman to buy back US$1bn of shares

From 1 April 2016 to 31 March 2017, the company will seek to repurchase Class A and Class B common shares for cash in open market purchases, block transactions, and privately negotiated transactions.

Brown-Forman’s current buyback scheme expires on 24 March 2016.

“Our company is very well-positioned to capitalise on continued global demand for premium American whiskey brands, led by our Jack Daniel’s trademark,” said Brown-Forman CEO Paul Varga.

“We have been investing significantly in our future growth and refining our portfolio of brands, including the recently announced sale of Southern Comfort, which is expected to close on 1 March 2016.

“Our excellent balance sheet, coupled with the anticipated proceeds from the sale of Southern Comfort and Tuaca and our strong and growing cash flow, allow us to continue to return capital to shareholders.”

Brown-Forman sold its Southern Comfort and Tuaca liqueur brands to fellow US spirits producer Sazerac for US$544m in January 2016.

The group said this formed formed part of its “evolving portfolio strategy” and “efforts to focus resources on its highest strategic priorities”.

Subject to regulatory clearance, the transaction is expected to close on 1 March 2016, giving Brown-Forman an operating income gain of approximately US$475m in fiscal 2016.

Brown-Forman’s Board of Directors declared a regular quarterly cash dividend of 34 cents per share on its Class A and Class B Common Stock.