D’Usse Cognac
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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
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:
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