The Duckhorn Portfolio Closes Acquisition of Sonoma-Cutrer Vineyards
The Duckhorn Portfolio, Inc. (NYSE: NAPA) has successfully acquired Sonoma-Cutrer Vineyards for approximately $50 million in cash and stock, bolstering its position as a premier luxury wine producer in the US. The acquisition adds iconic Chardonnay brands to its portfolio and is expected to drive growth and value creation for stakeholders. This move aligns with the company's strategy to expand its luxury wine offerings and reach a broader consumer base.
The acquisition of Sonoma-Cutrer Vineyards is expected to be accretive in the first full fiscal year, exceeding the initial synergy estimate of $5 million.
The addition of 1,121 acres of estate vineyards in the Russian River Valley and Sonoma Coast appellations provides opportunities for further optimization of grape supply and production.
The inclusion of experienced Brown-Forman executives on The Duckhorn Portfolio's Board of Directors enhances the company's leadership team and brings valuable industry expertise.
While the acquisition is expected to drive growth, there may be integration challenges in merging the operations and cultures of the two companies.
The success of the acquisition and realization of synergies depend on effective execution of the integration plan and market acceptance of the expanded product offerings.
Insights
The acquisition of Sonoma-Cutrer by The Duckhorn Portfolio represents a strategic expansion within the luxury wine market, particularly focusing on the luxury Chardonnay segment, where Sonoma-Cutrer has a notable presence. The transaction, valued at approximately
From a financial standpoint, the projected accretive nature of the acquisition in the first full fiscal year and expected synergies exceeding
The addition of Sonoma-Cutrer significantly enhances Duckhorn's portfolio in the Chardonnay category, which is currently leading domestic white varietals. This move is likely to bolster Duckhorn's market share and brand positioning, tapping into Sonoma-Cutrer's established consumer base and distribution networks. The strategic placement of Sonoma-Cutrer within Duckhorn's existing brand architecture, along with limited account overlap, hints at a targeted approach to market penetration and growth.
This acquisition could well position Duckhorn to outpace industry growth by leveraging the brand strength and scale of Sonoma-Cutrer. The expansion not only diversifies Duckhorn's luxury wine offerings but also expands the company's geographic footprint with 1,121 acres in key Californian appellations, enhancing its production capabilities and potentially its negotiating power in the market.
Adds Two New Members to the Board of Directors
The Company finalized the acquisition for the previously announced consideration of approximately
“We are thrilled to add the acclaimed Sonoma-Cutrer winery brand to our portfolio of luxury winery brands and welcome their talented team,” said Deirdre Mahlan, President, Chief Executive Officer and Chairperson of The Duckhorn Portfolio. “The addition of these iconic and carefully curated wines to our offering broadens our reach in the luxury Chardonnay category and further cements our place as the premier pure-play producer of luxury wine in the US. We believe this acquisition will enhance our ability to deliver a full portfolio of luxury wines to the consumer, and further advance our ambition to drive consistent, profitable growth and create meaningful value for all our stakeholders.”
Since its founding in 1973, Sonoma-Cutrer has become one of
Key Benefits
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The acquisition is expected to be accretive in the first full fiscal year based on expected run-rate synergies, which are now expected to exceed the Company’s initial estimate of
$5 million - The Company anticipates additional opportunities to accelerate net sales growth as a result of Sonoma-Cutrer’s complementary placement within the existing brand and varietal architecture and relatively limited account overlap.
- The Company expects further optimization of the grape supply and production model with the addition of 1,121 acres of estate vineyards in the Russian River Valley and Sonoma Coast appellations.
- The Company welcomes Brown-Forman, a leader in beverage alcohol with over 150 years of industry experience, as a well-respected shareholder and looks forward to the contributions of Marshall Farrer and Tim Nall as members of The Duckhorn Portfolio Board of Directors.
- The acquisition terms allow the Company to maintain its current debt leverage ratio, affording the financial flexibility to drive future growth.
About Marshall Farrer
Marshall Farrer is the executive vice president, chief strategic growth officer for Brown-Forman. Marshall began his career at Brown-Forman in 1998, as a marketing manager in the Wine Division in
About Tim Nall
Tim Nall is the executive vice president, chief global supply chain and technology officer for Brown-Forman. Since 2000, he has held positions of increasing responsibility within Brown-Forman’s Global Production group, including director of campus production operations, vice president and general manager of Brown-Forman Wines, vice president, director of technical services, and most recently, senior vice president, chief information and advanced analytics officer. Prior to Brown-Forman, he was employed by Alcoa, American Air Filters, and S.S.T.I. (Ford Motor Company/Johnson Controls joint venture). He earned a Bachelor of Science in Electrical Engineering from the University of Louisville JB Speed School of Engineering. He later earned a Master of Business Administration at University of Louisville with a concentration in operations management.
About The Duckhorn Portfolio
The Duckhorn Portfolio is North America’s premier luxury wine company, with eleven wineries, ten state-of-the-art winemaking facilities, eight tasting rooms and over 2,200 coveted acres of vineyards spanning 38 Estate properties. Established in 1976, when vintners Dan and Margaret Duckhorn founded Napa Valley’s Duckhorn Vineyards, today, our portfolio features some of North America’s most revered wineries, including Duckhorn Vineyards, Decoy, Sonoma-Cutrer, Kosta Browne, Goldeneye, Paraduxx, Calera, Migration, Postmark, Canvasback and Greenwing. Sourcing grapes from our own Estate vineyards and fine growers in
Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In some situations, you can identify forward-looking statements by words such as “approximately,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “future,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will” and similar terms and phrases to identify forward-looking statements. These forward-looking statements include, among others, statements about the potential market opportunity resulting from the acquisition of the Sonoma-Cutrer and associated business strategy, the Company’s ability to better address certain markets, expand its capabilities and position in the industry and extend its product offerings to better serve our customers, as well as the potential synergies and other financial benefits derived by and financial impact to the Company from the acquisition. All of our forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we are expecting, including: risks associated with transactions generally; the failure to consummate or delay in consummating the transaction for other reasons; the risk that a condition to closing of the transaction may not be satisfied; the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement; the outcome of any legal proceedings that may be instituted following announcement of the transaction; failure to retain key management and employees of Sonoma-Cutrer; issues or delays in the successful integration of Sonoma-Cutrer’s operations with those of the Company, including incurring or experiencing unanticipated costs and/or delays or difficulties; unfavorable reaction to the transaction by customers, competitors, suppliers and employees; unpredictability and severity of catastrophic events, including but not limited to acts of terrorism, war or hostilities, as well as management’s response to any of the aforementioned factors; and additional factors discussed in the Company’s filings with the SEC.
The forward-looking statements contained in this press release are based on management’s current plans, estimates and expectations in light of information currently available to the Company and are subject to uncertainty and changes in circumstances. There can be no assurance that future developments affecting the Company will be those that the Company has anticipated. Actual results may differ materially from these expectations due to changes in global, regional or local political, economic, business, competitive, market, regulatory and other factors, many of which are beyond our control, as well as the other factors described in Item 1A, “Risk Factors” in the Company’s 2023 10-K filed with the SEC on September 27, 2023, and the Company’s 10-Q for the quarter ended January 31, 2024, filed with the SEC on March 7, 2024, and other documents the Company may file with the SEC from time to time. Should one or more of these risks or uncertainties materialize or should any of our assumptions prove to be incorrect, our actual results may vary in material respects from what we may have expressed or implied by these forward-looking statements. Any forward-looking statement made by the Company speaks only as of the date on which it is made. All future written and oral forward-looking statements attributable to the Company or persons acting on the Company’s behalf are expressly qualified in their entirety by the previous statements. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by applicable securities laws.
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Investor Contact
Ben Avenia-Tapper
IR@duckhorn.com
(707) 339-9232
Media Contact
Jessica Liddell, ICR
DuckhornPR@icrinc.com
(203) 682-8200
Source: The Duckhorn Portfolio, Inc.
FAQ
What is the stock symbol of The Duckhorn Portfolio, Inc.?
The stock symbol of The Duckhorn Portfolio, Inc. is NAPA.
What is the estimated value of the acquisition of Sonoma-Cutrer Vineyards?
The acquisition of Sonoma-Cutrer Vineyards is valued at approximately $50 million in cash and stock.
Who are the new members appointed to The Duckhorn Portfolio's Board of Directors?
The new members appointed to The Duckhorn Portfolio's Board of Directors are Marshall Farrer, Chief Strategic Growth Officer, and Tim Nall, Chief Global Supply Chain and Technology Officer from Brown-Forman.
