Bacardi
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Source: Kevin Mazur / Getty
It seems Jay-Z’s concerns over his cognac brand are no longer. He and Bacardi have jointly announced a long-term agreement that renews their partnership with D’USSÉ.
As spotted on Bloomberg Law, the two parties have come to terms on the splits behind the dark liquor. According to a press release, the agreement, which positions the iconic cognac brand for its next era of growth, Bacardi has acquired a majority interest in the multi-billion-dollar brand from Mr. Carter. And he will retain a significant ownership stake in the brand. The agreement brings their ongoing legal dispute to an end.
Back in October, Hov’s corporation, SC Liquors, demanded total financial transparency from the global conglomerate. In addition he is asked some very pointed questions regarding the production process including “the location of all warehouses storing D’Ussé barrels, bottles and accessories.” Empire Investments Inc., a wholly owned subsidiary of Bacardi International Ltd., formally responded with a filing in Delaware’s Chancery Court.
Their legal team claimed Bacardi and Jay-Z made a “handshake deal” back in December 2021 agreeing that the “Otis” MC would sell his 50% stake in the brand. But the corporation says Hov “abruptly reneged on its agreement and doubled its demanded valuation.” Additionally, Empire stated that they have disclosed over 800 pages of financial records.
Jay-Z expressed his enthusiasm on reaching an agreement. “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 2012, Jay-Z and Bacardi partnered to launch D’USSÉ Cognac. Since then, the brand has landed numerous distinctions including Double Gold at the 2021 San Francisco World Spirits Competition and Double Gold at the 2022 Proof Awards.
Photo: Kevin Mazur / Getty
After months of fighting in court, Jay-Z and Bacardi have decided it’s all cognac — er — water under the bridge.
The superstar rapper and the spirits giant said Friday they had reached an agreement to end bitter litigation over their D’Ussé Cognac brand. Under the deal, Bacardi will take over a “majority interest” in the company, which was previously split 50-50 between the two stakeholders.
The exact terms — what percentage Bacardi bought and how much Jay-Z was paid for it — were not disclosed, beyond a statement that the star would “retain a significant ownership stake” after the deal. Earlier filings in the case suggested the privately-held company could be worth as much as $5 billion.
In a statement, Jay-Z (real name Shawn Carter) said he was “excited to renew this partnership with Bacardi.”
“Growing D’Ussé over the past decade from an idea to one of the fastest-selling spirits in history has been a blessing,” the rapper wrote. “The next phase of this journey will further cement D’Ussé’s legacy as one of the world’s most respected brands.”
Until recently, Jay-Z was not at all excited to renew his D’Ussé deal with Bacardi. The rapper has spent the last year in a sprawling legal battle aimed at exiting the partnership, spanning at least four lawsuits in two states as well as private arbitration cases.
The dispute centered on Jay-Z’s exercise of a so-called “put option” — a legal mechanism in the joint venture’s operating agreement that, when triggered, required Bacardi to buy out his half of the business. Once invoked, the two sides were supposed to negotiate in “good faith,” exchange information and agree on a fair price for Bacardi to pay.
The rapper triggered the put option in September 2021, but the two sides quickly came to loggerheads over how much his half of the company was worth. The rapper suggested his half of the business was worth $2.5 billion; Bacardi said the number was just $460 million.
That core dispute eventually led to two private arbitrations, as well as lawsuits in both New York and Delaware courts. The two sides battled over what information should be used to fairly value Jay-Z’s stake, and he later accused Bacardi of “lowballing” and “stonewalling” him to get a cheaper price.
In November, unsealed court documents revealed key details of the months that had led up to the dispute.
For instance, when Bacardi offered $460 million for Jay’s half of the business, the hip-hop magnate’s attorneys said he responded by flipping the script. Rather than continue to invoke his put option requiring Bacardi to buy him out, they said he offered to go vice-versa and buy out Bacardi’s share for $1.5 billion — far more than the figure Bacardi had just cited as the fair value of half the company.
When Bacardi turned down that offer, the legal battle kicked off.
Before Jay-Z became embroiled in a nasty dispute with Bacardi over their D’Usse Cognac brand, he offered to buy out Bacardi’s half of the business for $1.5 billion, according to newly unsealed legal documents that reveal the sweeping size of the ongoing legal battle.
In the new filing, attorneys for Jay-Z’s SCLiquor LLC disclosed that the star made the offer last year after Bacardi offered him just $460 million for his half of D’Usse. Bacardi quickly rejected the offer, the filing said, even though the star had proposed to pay more than three times what the liquor giant itself believed a 50% stake in the business was worth.
The new document also reveals that Jay-Z believes his share in the business is worth $2.5 billion, the first public hint at how much the star is seeking from Bacardi amid the acrimonious split.
Taken together, the disclosures offer an early glimpse into how much could be at stake in the now-sprawling legal battle over Jay-Z’s efforts to exit D’Usse, which spans at least four lawsuits in two states as well as a private arbitration case.
A rep for Jay-Z declined to comment. A spokeswoman for Bacardi did not immediately return a request for comment on the disclosures.
The legal battle over D’Usse centers on Jay-Z’s exercise of a so-called “put option” — a legal mechanism in the joint venture’s operating agreement that, when triggered, requires Bacardi to buy out Jay-Z’s half of the business. Once invoked, the two sides are supposed to negotiate in “good faith,” exchange information and agree on a fair price for Bacardi to pay.
In this week’s unsealed documents, Jay-Z’s lawyers said he triggered the clause in September 2021, but that when the two sides exchanged figures in December 2021, they came in with vastly different valuations. The rapper suggested his half of the business was worth $2.5 billion; Bacardi said the number was just $460 million.
That was when Jay-Z apparently made his counter-offer: Rather than continue to invoke his put option requiring Bacardi to buy him out, he would offer to go vice-versa. “SC formally offered to buy Bacardi’s 50% interest in D’Usse for $1.5 billion, three times Bacardi’s declared valuation of its share (but less than SC believed it was worth),” his lawyers wrote in the new documents.
When Bacardi turned down that offer, the legal battle began.
As a first step, independent experts at JPMorgan were hired to appraise Jay-Z’s stake in D’Usse, but the process quickly became bogged down in disputes over what processes and data the bank should use to do so. Those disputes were submitted to a private arbitration panel, which then led to multiple New York court lawsuits challenging the arbitration panel’s rulings. Two separate lawsuits have also been filed in Delaware court, accusing Bacardi of “stonewalling” and demanding more access to information from D’Usse.
Those cases are all ongoing, including with a testy hearing in New York court on Thursday (Dec. 1) and a potential arbitration hearing on Friday (Dec. 2).
Notably, the newly unsealed document appears to have been made public accidentally.
Like much of a legal battle that’s been shrouded in unusual secrecy, the filings were originally submitted on Nov. 22 under seal. But on Tuesday (Nov. 29) evening, they were suddenly made public on the court’s digital docket. Letters to the judge indicate that the move was unexpected and that the filing should not have been published until it was further redacted. The document, first reported by Bloomberg Law and independently obtained by Billboard, was then fully re-sealed by Thursday afternoon.
Along with Jay-Z’s massive offer, the filing also revealed other key financial information about the dispute.
For instance, Jay-Z’s lawyers say they wanted JPMorgan’s appraisal to be based on an internal Bacardi document that forecast D’Usse to sell more than 2 million cases of cognac and earn $142.8 million annually by 2026. Bacardi apparently objected, saying those figures were “aspirational” and not a good indicator of the brand’s actual value.
Whether or not JPMorgan can cite the Bacardi forecast is now one of the major points of contention in the litigation.
Read the entire unsealed document here:
Jay-Z wants to sell his stake in D’Usse Cognac, and says that Bacardi – which owns the other half of the business – is legally required to buy it. But in a new lawsuit, the superstar claims the liquor giant is “lowballing” and “stonewalling” him to get a cheaper price.
In a complaint filed in Delaware court, Jay-Z’s SCLiquor LLC says that it exercised a contractual option to sell its 50 percent stake in D’Usse to Empire Investments, the Bacardi unit that owns the other half and runs the company’s day-to-day operations. Hov’s company claims the move came after years of “mismanagement and underperformance” by Bacardi.
But according to the lawsuit, which was made public on Thursday (Oct. 20), Bacardi and Empire responded to the move not by following the rules, but by refusing to hand over key information and scheming to “artificially depress” the price it would pay.
“Empire sought to stall and stonewall SC’s efforts in an attempt to wrest SC’s 50% membership interest in D’Usse at a cheaper price by, among other things, refusing to provide necessary information,” SCLiquor’s lawyers wrote.
According to the lawsuit, SCLiquor holds a so-called “put option” on D’Usse’s corporate entity, a legal mechanism that, when triggered, requires Bacardi to buy out Jay-Z’s half of the business. The two sides are supposed to negotiate in “good faith,” exchange information and agree on a fair price.
But Jay-Z’s lawyers say that when they exercised the put option last year, Empire and Bacardi did anything but operate in good faith.
“Instead, Empire has abused its day-to-day control of D’Usse to deprive SC of information necessary to … assess D’Usse’s value,” SCLiquor’s lawyers wrote. “Empire has done so by engaging in an apparent shell-game with its parent company Bacardi.”
They say the move to sell off Hov’s stake came amid “growing concern” about how Empire was running the company, including its “blatant conflict of interest” with Bacardi. Jay-Z’s lawyers say Empire has relied on Bacardi to provide key services, even though the parent company has had repeated failures that hurt D’Usse, including supply chain failures and an unwillingness to change prices.
In its current form, the lawsuit is only seeking to force Empire to turn over more information about D’Usse. But the complaint says that information will also be used to “investigate potential future actions for damages.”
A rep for Bacardi did not immediately return a request for comment on the lawsuit.
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