Accusations fly over Jay-Z’s billion-dollar Bacardi legal battle
A company majority owned by rap artist Jay-Z has applied to the US District Court Southern District of New York for the right to subpoena six New York insurers for documents to purportedly use in a multibillion-dollar Bermuda lawsuit.
The application for discovery relates to a dispute involving Bermuda-headquartered Bacardi, its US subsidiary and SCLiquor, LLC, a company majority-owned by the world-renowned musical artist and entrepreneur Shawn Carter — better known as Jay-Z.
The dispute involves legal filings and hearings in Delaware Chancery Court, in New York and potentially in Bermuda.
SC and the Bacardi subsidiary, Empire, are partners and equal owners of D’Usse LLC, a joint venture created in 2012 to produce, market, and sell a premium Cognac brand with remarkable success.
In late 2021, SC exercised a contractual put option compelling Bacardi’s Empire to buy out SC’s 50 per cent interest in the joint venture.
SC claims in documents before the New York court, and published by Offshore Alert, that their portion of the company was worth $2.5 billion dollars, but that Bacardi caused Empire to breach its contractual obligations to SC by seeking to force SC to sell its interests for far less.
It was also claimed that the Bacardi US subsidiary expected that D’Usse would continue its growth, and sell two million cases annually by 2026, but that it still undervalued the brand in anticipation of the purchase of SC’s shares.
During December 2021 negotiations, SC said based on company performance, the brand’s projected performance and investment banking advice, it valued half of the company at $2.5 billion. But the Bacardi subsidiary, Empire, said it was worth only $460 million.
Bacardi had previously claimed in published reports that Jay-Z had backed out of a deal to sell.
TMZ reported the Bacardi statement in November that the rapper was trying to double the brand's value and make a bundle.
In filings before the New York court, SC not only alleged that the Bacardi subsidiary was trying to devalue the company, but that it was not the first time they had taken such action in a joint venture.
SC claimed the uncovering of “evidence of a history, pattern, and practice of Bacardi attempting to artificially depress joint venture valuations in order to purchase them on the cheap.”
SC is now said to be considering litigation against Bacardi in Bermuda, alleging they procured a breach of D’Usse’s operating agreement under Bermudian law.
SC was seeking the New York court’s help in obtaining evidence from certain Bacardi investors through documents held by Equitable Holdings, Inc., Gerber Life Insurance Company, The Guardian Life Insurance Company of America, The Hartford Financial Services Group, Inc., Renaissance Reinsurance U.S. Inc., and SBLI USA Mutual Life Insurance Company, Inc.