Rapper-turned-mogul Jay-Z is preparing to take his lawsuit against one of his partners in the adult beverage space to foreign soil, hoping to end an over two-year battle for sole ownership.
On Wednesday, Jan. 4, the Roc Nation founder, whose real name is Shawn Carter, filed a complaint on behalf of his SC Liquors against a Bacardi subsidiary to sever its joint venture deal in the D’Ussé brand. The 20-year partnership was formed in 2012 and required Bacardi to produce, market, and sell the premium Cognac, Offshore Alert reports.
The company applied for the right to subpoena six New York insurers with the US District Court Southern District of New York to obtain documents to use in a planned Bermuda lawsuit in SC Liquors’ pursuit of discovery, according to Royal Gazette, regarding “a dispute between Bacardi, one of the world’s largest spirits companies, and SC Liquor, LLC, a company majority-owned by the world-renowned musical artist and entrepreneur Shawn Carter – better known as Jay-Z.”
The federal court received an application by SC Liquor LLC to pull discovery from the following insurance companies: 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.
About the Lawsuit
SC Liquors, a company where Jay-Z owns a majority shares, had a “contractual put option” in the D’Ussé Operating Agreement that affords Jay-Z the right to sell his 50 percent of the interest in the D’Ussé company to his Bacardi subsidiary in December 2021, with the price to be determined after both companies “negotiate in good faith and exercise commercially reasonable efforts.” However, this effort is stalled because, according to the rapper’s lawyers, the Bermuda-based Bacardi has undervalued the company and is attempting to force a sale for far less than what the Brooklyn-born rapper says is his stake’s $2.5 billion value.
According to SC Liquors’ court filing last week in the Southern District of New York, in December 2021, Barcadi/Empire offered Jay-Z only $460 million to $510 million for half of his stake — 25 percent of the company — implying a valuation of roughly $1 billion for his half of the company. SC Liquors declined, the filing says, and countered by offering Empire $1.5 billion for its half of D’Ussé. Jay-Z’s attorneys say Empire declined this offer — which was a valuation 50 percent higher than Empire itself had made — and subsequently reduced its offer to $460 million for SC Liquors’ entire stake. The two sides have been in litigation since then.
According to executives at SC Liquors, Bacardi is trying to buy his shares for less than half of what it is actually worth.
The complaint alleges Bacardi U.S. subsidiary projects D’Usse to have continued growth, and by 2026, Empire would have sold two million cases internationally. Still, SC Liquors contends that the company is using that projection to justify its undervalued assessment of the brand as it anticipated Jay-Z’s purchase of shares.
The lawsuit states, “Based on those events, SC is now preparing to bring litigation against Bacardi in Bermuda, where Bacardi is incorporated and headquartered (the ‘Bermuda Action’), for procuring a breach of D’Ussé’s Operating Agreement under Bermudian law.”
Adding, “In aid of that contemplated case, SC seeks this Court’s assistance to obtain relevant evidence from certain investors in Bacardi and/or its affiliates that are found within this Court’s jurisdiction. SC therefore respectfully requests that this Court approve the application and permit service of the proposed subpoenas seeking documents to aid its anticipated Bermuda Action.”
Ongoing Legal Dispute
This lawsuit follows an October 2022 filing where Jay-Z’s legal team demanded Bacardi submit full financial records regarding the joint venture. The call for transparency would allow SC attorneys to review D’Ussé’s production and sales, all books and records for the business, “the location of all warehouses storing D’Ussé barrels, bottles and accessories,” and records pertaining to Bacardi’s physical inventory processes.
After this lawsuit was filed, Bacardi’s legal team stated it has already handed over 800 financial documents to SC and believed all other financials requested by Jay-Z’s team are not related to the D’Ussé partnership.
The company further believes Jay-Z sought to “outrageously inflate” the brand’s value in an effort to gain a larger profit on the back end, pointing to a “handshake deal” made between its subsidiary Empire Investments and Jay-Z regarding the sale of D’Ussé. They believe Jigga is the person who “abruptly reneged on its agreement and doubled its demanded valuation,” according to TMZ.
Still SC Liquors says it has found through its own investigation “evidence of a history, pattern, and practice of Bacardi attempting to artificially depress joint venture valuations in order to purchase them on the cheap.”
Jay-Z, whose net worth is $1.3 billion, has not publicly addressed the litigation. But according to the court papers, maintains his team needs to “monitor the conduct of [Bacardi’s] business to protect SC’s rights” as a partner.