In another example of successful entertainer turned mogul putting earnings to work in business investments, it was announced that Shawn “Jay-Z” Carter and Bacardi Ltd. have agreed to settle the long and bitter legal dispute over their 50/50 cognac joint venture. As part of the settlement, Jay-Z has agreed to sell a portion of his stake in D’Usse to Bacardi as part of a deal that values the cognac joint venture as a “multibillion-dollar brand” with Jay-Z still retaining a “significant ownership stake” in the company.
Jay-Z and Bacardi acquired D’Usse in 2012 and built the brand into the fastest growing and one of the best-selling cognac brands in the world over the last decade. However, in October 2021, Jay-Z sought to exit the company by exercising a put option, or “push-pull” provision, pursuant to the terms of the joint venture agreement between the parties.
Jay-Z asked Bacardi to purchase his 50% stake at a value of $2.5 billion while Bacardi responded with a value of $460 million. As no agreement to purchase Jay-Z’s stake was agreed, Jay-Z then offered to purchase Bacardi’s 50% stake for $1.5 billion, which was rejected. The parties then turned to independent valuation to value the joint venture and legal actions followed. Jay-Z will remain a part of the D’Usse joint venture at a less than 50% ownership stake which, for brand value and loyalty, is important for the cognac brand as a going concern.
This highlights the potential for legal action even in amicable business arrangements and the importance of having sophisticated advisors helping guide athletes, entertainers and creators when putting their career earnings to work in business investments so to ensure that their interests are properly protected when entering, during and exiting business ventures.
