Music mogul Jay-Z and a Bacardi Ltd. affiliate have resolved their dispute over their multibillion-dollar cognac joint venture, D’Usse, after months of contentious arbitration and litigation in multiple courts.
The settlement, announced in a press release Friday, calls for an affiliate of the liquor giant to buy out a majority of the rap star’s 50% stake in the cognac company, D’Usse LLC, leaving Bacardi owning at least 75.01% of the business.
Jay-Z, whose given name is Shawn Carter, will retain “a significant ownership stake” through his company SCLiquor LLC, according to the press release. He called the venture “a blessing” in a statement, touting its growth. “I am excited to renew this partnership with Bacardi,” Jay-Z said.
The deal’s other terms weren’t disclosed, but Jay-Z has maintained throughout the public dispute that D’Usse is worth at least $3 billion, and court papers show Bacardi previously rejected his $1.5 billion bid for its 50% stake. The move indicated it agreed with Jay-Z’s proposed valuation, he has claimed.
The press release refers to the cognac maker simply as a “multi-billion dollar brand.” But at a $3 billion valuation, the deal would be worth at least $750 million.
A spokesperson for Bacardi declined to comment on the deal’s details Friday but, in a statement to Bloomberg Law, called Jay-Z “an invaluable partner.”
“We have deep respect for his creativity and business acumen and are proud of our accomplishments in establishing D’Usse as a leader in an exciting and competitive category,” the statement said.
A representative for Jay-Z didn’t immediately respond to requests for additional comment Friday.
SCLiquor has said elsewhere that it believes D’Usse is worth up to $5 billion, including in a sworn declaration by Desiree Perez, the CEO of Jay-Z’s entertainment company, Roc Nation, who serves on the D’Usse board.
The agreement resolves Jay-Z’s demand for a buyout over concerns that Bacardi subsidiary Empire Investments Inc.—which oversees the cognac’s day-to-day operations—was mismanaging the brand by failing to prepare for a surge in consumer demand tied to its rapid growth.
After initial negotiations broke down—with Bacardi offering $500 million for Jay-Z’s interest in the venture and rejecting his $1.5 billion counteroffer for its own stake—the liquor manufacturer won several preliminary rounds in arbitration.
The rapper then took case to court, challenging the composition of the arbitration panel over concerns that one of its members was a racist and another harbored a personal grudge.
SCLiquor also claimed in a separate lawsuit that Bacardi was stonewalling its requests to scour company records for evidence the spirits maker was intentionally running D’Usse into the ground to manipulate its valuation and drive down the buyout price.
Judges in New York and Delaware initially declined to intervene in the arbitration proceedings, although several collateral cases remained pending as of the settlement.
According to the press release, Jay-Z was advised on the deal on the deal by investment banking firm Evercore and three law firms: Paul, Weiss, Rifkind, Wharton & Garrison LLP; Gibson, Dunn & Crutcher LLP; and Reed Smith LLP.
His company was previously represented in Delaware court by Young Conaway Stargatt & Taylor LLP and Gibson Dunn, and in New York by Quinn Emanuel Urquhart & Sullivan LLP. Empire was represented in both courts by Cravath, Swaine & Moore LLP and in Delaware by Richards, Layton & Finger PA.
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