Brown-Forman (BF.B) and Pernod Ricard's potential merger makes strategic sense on paper due to portfolio complementarity and other factors, but execution would likely be messy, RBC Capital Markets said in a note Friday.

Execution of a potential deal would likely be complicated due to "cultural differences, mismatch in capabilities" as well as "significant consideration for many family members" on both sides, the note said.

Brown-Forman shares rose sharply after a media report indicated that the company and Pernod Ricard were exploring a deal similar to a merger of equals, the investment firm said, adding talks have been confirmed by both companies.

From a "geographic perspective, the opportunity is compelling" as Brown-Forman is "heavily indexed" to the US, while Pernod Ricard has a strong presence in Europe, Africa, and Asia, particularly in China and India, RBC said.

However, "execution risk is very high" as both firms "have been struggling and we expect that will continue in the near-term," the note said.

RBC has a sector perform rating on Brown-Forman and a $30 price target.