Butterfly Equity to buy Duckhorn Portfolio wines for nearly $2B

Diving overview:

• Private equity firm Butterfly Announces acquisition of Duckhorn Portfolio Sold fine wine for $1.95 billion in an all-cash transaction.
• Duckhorn, which is based in Napa Valley, California and operates 11 wineries across the West Coast, will continue to operate under that name and will become a privately held company after the transaction, the company said in a press release. Duckhorn currently trades on the New York Stock Exchange as NAPA.
• Since its founding in 2016, Butterfly Equity has amassed a variety of food and beverage acquisitions, including Milk Specialties Global, Bolthouse Fresh Foods, Orgain, and Qdoba Restaurants.

Dive Insight:

The major deal comes as part of a major consolidation in the wine industry, which has seen declining sales amid changing drinking trends among younger consumers.

Duckhorn President and CEO Deirdre Marlan said in a statement that Butterfly’s acquisition will help the company enter its next phase of growth.

“Butterfly brings a proven track record of strengthening portfolio companies while helping them advance their long-term strategic objectives,” said Marlan. “Through our partnership with Butterfly, Duckhorn Portfolio looks forward to building a strong foundation and strengthening our resources to further expand our business.”

Marlan said the company’s shareholders will receive a “substantial premium” of $11.10 in cash per share.

Duckhorn’s largest wine brands include Duckhorn Vineyards, Decoy, and Costa Brown. Last fall, duck horn Portfolio acquires California Chardonnay maker sonoma cutler Acquired vineyards from spirits giant Brown-Forman for $400 million.

Butterfly said he believes the transaction will strengthen Duckhorn’s position as one of North America’s premier premium wine producers.

“We believe our carefully selected portfolio of premium wine brands, structurally advantageous business model and world-class team lay the foundation for a strong, scalable platform that will continue to drive growth through organic and strategic acquisitions. ” said the Butterfly partner. Vishal Patel said in a statement.

2024 has been a challenge for winemakers, as many consumers are cutting back on their purchases and drinking less. According to the report, wine consumption last year fell by 2.6%, the lowest level since 1996. International Vine and Wine Organization (OIV) Annual Report Released in April.

At Duckhorn Financial report Chief Executive Officer Mahlan told investors in June that difficult market conditions in the wine industry had affected results in the first half of the year. But he said premiumization remains the driving force in the category, as the company’s wines in the $15 to $25 price range outperform lower-end brands that sell for less than $15 a bottle. .

Critics of Butterfly’s proposed acquisition expressed concerns about the deal after it was announced. Wall & Fruchter, a law firm specializing in corporate fraud allegations, on Monday investigated whether Duckhorn’s board of directors had shareholders’ best interests in mind when pursuing the nearly $2 billion acquisition. announced that it was doing so.

“This includes whether the agreed upon price is fair to Duckhorn’s shareholders and whether all material information about the transaction is fully disclosed,” Joshua Fruchter, a partner at the law firm, said in a statement. included.”