A report by The Telegraph left some speculating that Bacardi, the world's largest privately held spirits maker, is preparing to woo an American whiskey maker -- and that Brown-Forman (BF.A -0.08%) (BF.B 0.04%), world famous for its Jack Daniel's Tennessee Whiskey, is at the top of its list.

In an interview with the London paper, Bacardi chief Ed Shirley let it be known that Bacardi was looking to fill a gap in its "brown spirits" portfolio when he acknowledged "the obvious gap that [Bacardi] has in bourbons and ryes." He also pointed out that Bacardi has "a track record in participation in industry consolidation as we have shown with Martini, Dewars, Bombay Sapphire, and Grey Goose." He ended by simply saying, "If it's right for us, we will do something."

However, he didn't specifically mention Brown-Forman as the right target.

Is Brown-Forman the next Beam?
Speculation about Brown-Forman as an acquisition target has been rife ever since Suntory acquired Beam earlier in the year. The names tossed about as possible suitors include publicly traded liquor giant Diageo (DEO 0.24%) and the companies Pernod Ricard and Bacardi.

Brown-Forman has never hinted that it is looking to sell itself. In fact, on many occasions the company has publicly stated its desire to remain independent. However, as I wrote in January, Bacardi has a distribution relationship with Brown-Forman and it is family-owned like the American whiskey maker. If Brown-Forman does decide to sell itself, Bacardi certainly has an inside track.

Why sell?
So what's in it for Brown-Forman? The company already has the top-selling American whiskey in the world. However, the land of opportunity in the industry seems to be beyond the borders of countries like the U.S. and in Western Europe and in developing countries, like China and India -- and even Africa. Bacardi distributes its brands to 136 countries, and it has a particularly strong presence in Russia. 

As consolidation increases across the industry, economies of scale along with wide-ranging spirits brands and price points are becoming greater necessities for all involved. While Brown-Forman has a strong array of brown spirits that includes Jack Daniel's and Southern Comfort, it lacks products in other categories.

A top-shelf deal
The acquisition of Brown-Forman would certainly be a feather in Bacardi's cap. I would argue that it would be an even greater pick-up than Beam was for Suntory. With nearly 11 million cases sold, Jack Daniel's bested Beam's global sales by around 4.4 million cases, or nearly 70% in 2012.

Brown-Forman continues to outpace its competitors with strong growth rates across the board, which includes a one-year growth rate for return on equity of 32%. During the same time period, the company's sales climbed 4.63% and its net income rose 15.2%. Over the last three years, its sales grew at an average rate of 4.93% and its net income grew at an average rate of 7.51%.

Brown-Forman released its most recent financials in December, which show that the company has continued its growth. For the quarter ended Oct. 31, 2013, its net sales climbed 6.4% to $1.08 billion, spearheaded by 10% underlying net sales growth for Jack Daniel's. In addition, Jack Daniel's excursion into the flavored whiskey market has been a rousing success. Underlying net sales for Tennessee Honey grew 30%, partly due to continued growth in the U.S. and advances into new international markets.

To buy, or not to buy
In terms of a flagship brown spirit to fill the gap, Bacardi would score a huge win if it added Jack Daniel's to its cabinet of brands. However, Bacardi might not be able to convince Brown-Forman to hand over the reins, as family interests control 70% of the company's voting shares. In the end, Brown-Forman may choose its independence over anything Bacardi brings to the table.

However, even if Bacardi and Brown-Forman don't shake hands, Brown-Forman is still a strong stock with a bright future and a proven global market leader in Jack Daniels. It also has plenty of room to grow. CEO Paul Varga noted that the whiskey category is the "top-performing spirits category of the last 10 years, at 6% annual growth." He also pointed out that while Jack Daniel's dominates its niche it only has a 3% share of the whiskey category, which includes Scotch, Irish, Canadian, and American whiskeys.