Corby Spirit and Wine Limited (“Corby” or the “Company”) announced it has signed a definitive agreement (the “Transaction”) to acquire 90% of the outstanding shares of Ace Beverage Group Inc. (“Ace Beverage Group” or “Ace”) for $148.5 million.
With roots dating back to 2013, Ace Beverage Group has achieved consistent high double-digit growth to become a Canadian RTD leader.
Its flagship brand, Cottage Springs, is the leading ready-to-drink (“RTD”) brand in Ontario, with a strong positioning in key category segments and bestsellers that include, Cottage Springs Vodka Soda, Vodka Water and Tequila Soda.
Ace also boasts a rich and diversified portfolio of other innovative brands, such as Ace Hill, Cabana Coast and Liberty Village.
The transaction adds significant scale to Corby’s portfolio in the high-growth RTD category.
Additionally, the Ace team brings to Corby a deeper understanding of the category and its consumers, along with agile innovation capabilities and execution excellence.
Compelling Strategic And Financial Benefits
- Expansion into the large, fast-growing, and highly attractive RTD segment, where RTDs have significantly outperformed other categories in the beverage alcohol market and continue to exhibit a vast runway for future growth.
- Adds Cottage Springs, the #1 RTD brand in the Liquor Control Board of Ontario (“LCBO”), along with other industry-leading brands Ace Hill, Cabana Coast and Liberty Village to Corby’s dynamic product portfolio.
- Combines two companies with proven track records of building brands, successful product development, innovation capabilities and ability to launch new on-trend products for consumers.
- Creates value for Corby shareholders: The transaction is expected to be highly accretive, adding an asset-light, low capex business to Corby, enabling Corby to enhance its growth profile, maintain strong margin, low leverage and return capital to shareholders.
Transaction Details
Under the terms of the agreement, Corby will initially acquire 90% of the outstanding share capital and voting rights of Ace for $148.5 million (at an overall enterprise value of $165.0 million), with the remaining 10% mainly held by certain Ace founders.
Corby has a path to 100% ownership of Ace through a series of two call options on the remaining shares, exercisable in 2025 and 2028.
The transaction was approved by Corby’s board of directors after receiving a fairness opinion from National Bank Financial Inc. and will be funded using available cash and financing in the amount of $120.0 million from Corby’s majority shareholder, Pernod Ricard.
The financing is on arm’s-length terms at market rates and, as a related party transaction, was approved by Corby’s independent directors, with external financial and legal advice.
Proforma, the transaction is expected to increase Corby’s operating revenue by approximately 35% and to be accretive on Corby’s operating margin.
Upon closing, proforma net debt/adjusted EBITDA (for the last twelve months) is expected to be 1.8x.
The transaction is expected to close in the first quarter of Corby’s fiscal year 2024.
Conference Call
Corby will host a conference call on Tuesday, June 13, 2023 at 9:00 a.m. (EST) to discuss the transaction.
Access the conference call via webcast at: https://app.webinar.net/nyGob21NkvJ; you can also dial 416-764-8659 or toll free 1-888-664-6392 before the start of the call.
A playback of the conference call will be available for 30 days by calling 416-764-8677 or 1-888-390-0541 and entering passcode 950172 #.
For more information and a copy of the investor presentation, please visit Corby’s website at corby.ca/en/investors/.
Advisors
National Bank Financial Inc. acted as financial advisor to Corby.
McCarthy Tetrault LLP acted as legal advisor to Corby. Nomura International plc acted as financial advisor to Pernod Ricard.
Stifel acted as financial advisor and Goodmans LLP acted as legal advisor to Ace Beverage Group Inc.