US – American-based spirits and wine business, Brown-Forman, has announced plans to sell its subsidiary, Sonoma-Cutrer Vineyards to the American wine company, Duckhorn Portfolio Inc., for approximately US$400 million.
Sonoma-Cutrer Vineyards was founded in 1973 and released its first wine in 1981. Brown-Forman acquired Sonoma-Cutrer in 1999 and for nearly 25 years has supported the growth and development of the brand.
Sonoma-Cutrer is now one of the largest luxury Chardonnay brands in the U.S. by retail sales and among the fastest growing major brands in the category.
According to a statement from Duckhorn Portfolio, Brown-Forman will receive US$50 million in cash and 21.5 percent of Duckhorn’s stocks that also gives it two seats on The Duckhorn Portfolio’s Board of Directors.
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.
Under the terms of the agreement, the Sonoma-Cutrer brand trademarks, facilities, and six vineyards in two appellations will join The Duckhorn Portfolio’s fine wine brands.
“The Duckhorn Portfolio has a strong reputation for producing and marketing some of the world’s finest wines.
Their understanding of the wine consumer, combined with a strong and diverse route to market, give Brown-Forman great confidence that Sonoma-Cutrer will continue to grow and thrive as part of the larger Duckhorn portfolio,” said Lawson Whiting, President and Chief Executive Officer, Brown-Forman Corporation.
The transaction is anticipated to be completed in the third quarter of the Company’s fiscal year 2024, subject to regulatory approvals and customary closing conditions.
This acquisition will enhance The Duckhorn Portfolio as a leading luxury wine company in the U.S., while rounding out its portfolio by significantly elevating the Company’s position within Chardonnay, the number one domestic white varietal, in which The Duckhorn Portfolio lacks a meaningful presence today.
For the twelve-month period ended July 31, 2023 (unaudited), Sonoma-Cutrer had approximately US$84 million of Net Sales.
The management estimates annual run-rate synergies of approximately US$5 million, which are expected to be realized in full starting fiscal year 2025.
It expects that the transaction will be accretive to Adjusted Earnings per Share in the first full fiscal year following the closing of the deal.