The Duckhorn Portfolio, a luxury wine company in North America, has announced a definitive agreement to acquire Sonoma-Cutrer Vineyards, one of the largest chardonnay wineries in the US, from Brown-Forman Corporation for approximately $400 million.
The deal will be financed through a combination of company stock and cash, further solidifying The Duckhorn Portfolio’s position in the luxury wine market.
Founded in 1973, Sonoma-Cutrer has established itself as a renowned brand with a commitment to blending traditional and contemporary winemaking techniques, resulting in a highly acclaimed chardonnay portfolio known for its refined style. The acquisition includes six estate vineyards spanning 1,121 acres in the Russian River Valley and Sonoma Coast appellations.
Sonoma-Cutrer, acquired by Brown-Forman in 1999, has experienced remarkable growth in the last 25 years. The transaction is valued at $400 million, with approximately $350 million in The Duckhorn Portfolio stock and $50 million in cash, subject to certain adjustments.
The strategic move positions The Duckhorn Portfolio as a key player in the luxury wine sector, particularly in the chardonnay category. With Sonoma-Cutrer’s track record of strong growth and commitment to quality, the acquisition aligns seamlessly with The Duckhorn Portfolio’s dedication to excellence in winemaking.
“We are delighted to welcome Sonoma-Cutrer Vineyards into The Duckhorn Portfolio,” said Deirdre Mahlan, the company’s interim president, CEO and chairperson. “Sonoma-Cutrer is an iconic, highly acclaimed winery brand with a long history of crafting exceptional wines in a timeless style and is a perfect addition to our thoughtfully curated portfolio of luxury wines.”
She continued: “We see opportunity to further accelerate that growth and enhance operating margins of the combined business. This transaction expands our presence and visibility, diversifies our portfolio of luxury American winery brands, and dramatically increases our position in the luxury chardonnay category.”
The deal is expected to close in the third quarter of the company’s fiscal year 2024, pending regulatory approvals and customary closing conditions. Brown-Forman will receive approximately 21.5% ownership in The Duckhorn Portfolio post-closing, along with the right to nominate two directors to the board.
Lawson Whiting, president and CEO of Brown-Forman, commented: “Adding Sonoma-Cutrer to The Duckhorn portfolio will enhance one of the most respected wine portfolios in the industry. Moreover, we believe an equity stake in The Duckhorn Portfolio will be a valuable investment for Brown-Forman, allowing us to maintain a presence in the wine category while focusing resources on building our premium and super-premium spirits brands.”
Financial details reveal Sonoma-Cutrer’s net sales for the 12-month period ending 31 July 2023 were approximately $84 million. Management anticipates annual run-rate synergies of approximately $5 million, expected to be realised in fiscal year 2025, making the transaction accretive to adjusted earnings per share in the first full fiscal year post-closing.
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