Jack in the box

28 August 2006 By Rob Cox Follow @rob1cox

The Jack Danielsmaker is paying 22 times operating profit to stock its bar with the premium Herradura tequila brand. This shows how pricy it will be for the family firm to create a full shelf on its own. A sale to Diageo or Bacardi deal would be quicker.

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BrownForman, the maker of Jack Daniels and Southern Comfort bourbons, agreed to acquire Grupo Industrial Herradura for $876m in cash.

Brown said Herradura reported $200m of sales last year, and made operating profit margins similar to Brown's 20%.

In addition to the premium Herradura branded tequila, the company sells El Jimador tequila, a brand popular in Mexico.

"These brands will also help us advance our business within the growing Hispanic population of the US and increase our participation in the exciting US cocktail culture," said Paul Varga, Brown's chief.

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