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Duckhorn to acquire Sonoma-Cutrer Vineyards for US$400 million
The Duckhorn Portfolio has agreed to acquire Sonoma-Cutrer Vineyards, a major player in luxury Chardonnay, from Brown-Forman.
Napa Valley’s Duckhorn has entered into an agreement to buy Sonoma-Cutrer, including its six vineyards spanning the Russian River Valley and Sonoma Coast appellations, with the deal expected to be completed by the third quarter of fiscal year 2024.
According to Duckhorn, the acquisition will “significantly elevate the company’s position within Chardonnay”, the number one white variety in the US, a category in which Duckhorn says it currently “lacks a meaningful presence.”
Founded in 1973, with its first wine released in 1981, Sonoma-Cutrer is one of California’s best-known luxury Chardonnay brands, with bottles retailing for US$20- US$50.
Acquired by Brown-Forman in 1999, Sonoma-Cutrer ended the 12-month period to 31 July 2023 with approximately US$84 million of Net Sales.
According to Lawson Whiting, Brown-Forman president and CEO, Brown-Forman will retain a minority stake and board membership in Sonoma-Cutrer following the sale, and looks forward to “participating in its future growth.”
As part of the deal, Brown-Forman will be entitled to nominate two directors to The Duckhorn Portfolio’s board of directors.
“We are delighted to welcome Sonoma-Cutrer Vineyards into The Duckhorn Portfolio,” said Deirdre Mahlan, Duckhorn’s interim president and CEO.
“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.”
“Sonoma-Cutrer is among the fastest-growing major brands in the luxury Chardonnay category. 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.”
Under the terms of the sales agreement, Brown-Forman will receive 31.5 million shares of Duckhorn’s common stock, valued at approximately US$350 million, and will also receive cash consideration of approximately US$50 million, subject to “certain adjustments”.
Sonoma-Cutrer will join Duckhorn Vineyards, Decoy, Paraduxx, Goldeneye, Migration, Canvasback, Calera, Kosta Browne, Greenwing and Postmark wineries within The Duckhorn Portfolio.