09:59 AM EDT, 03/27/2026 (MT Newswires) -- Brown-Forman's (BF.A, BF.B) potential merger with Pernod Ricard is likely to face high execution risk due to cultural differences between the companies, RBC Capital Markets said in a Friday note.

Jack Daniel's maker Brown-Forman and French beverages firm Pernod Ricard separately announced Thursday they were in talks about a possible merger of equals, but there is no certainty a deal will happen.

A potential merger could complement the companies' businesses, but faces "very high" execution risk due to cultural differences and mismatch in capabilities, RBC said. The brokerage added that family control at both companies could also make a deal complicated.

The Brown family controls a majority of Brown-Forman's voting stock, according to a 2025 integrated annual report. The Ricard family is a significant shareholder in Pernod, Bloomberg News reported.

"Both companies have been struggling and we expect that will continue in the near-term," RBC's co-head of global consumer and retail research, Nik Modi, said in the note. "Big (mergers and acquisitions) typically does not work and we think this potential combo would be more the normal than the exception."

However, a potential combination could complement the companies' product portfolios, RBC said. Pernod Ricard has brands related to whiskey, vodka, gin, liqueurs, rum and champagne, while Brown-Forman focuses mainly on American whiskey, tequila, and ready-to-drink offerings, according to the brokerage.

The potential deal also presents geographic benefits, RBC said. Brown-Forman generates about 44% of its sales in the US, while Pernod Ricard has strong reach in Europe, Africa, and Asia, including India and China, where Brown-Forman has limited presence, the note said.

RBC said a possible merger has "several parallels" to the Estee Lauder ( EL ) -Puig talks. Earlier this week, Estee Lauder ( EL ) said it was in discussions with Spanish beauty and fashion group Puig about a possible combination.

"We remain cautious on Brown Forman given current industry fundamentals (we think it will get worse before it gets better)," Modi wrote. The brokerage has a $30 price target on Brown-Forman's stock and a sector perform rating.