Transaction adds Canada's
fastest growing RTD brand to Corby's dynamic portfolio
TORONTO, June 12,
2023 /CNW/ - Corby Spirit and Wine Limited ("Corby"
or the "Company") (TSX: CSW.A) (TSX: CSW.B) today 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.
"Corby's sustained growth relies on our ability to bring
exciting choices to our consumers, by continually expanding into
new and promising categories. We are extremely excited to partner
with Ace and become one of the leading RTD players in Canada, as we believe the combined strength of
our companies and people will unlock new opportunities," said
Nicolas Krantz, Corby's President
and Chief Executive Officer. "The Ace team has built an inspiring
business, through a culture of execution excellence, consumer
centricity and passionate people. We look forward to welcoming them
to Corby and are excited about the benefits this acquisition will
create for our consumers, customers, and shareholders."
Ace Beverage Group's Co-Founder, Cam
McDonald, added "We are thrilled to join Corby, and are
extremely proud of Ace's journey and accomplishments to date. As we
begin this next chapter, we believe the significant joined
expertise, experience and resources will help our businesses to
take the next step in our shared ambition of continuing to develop
industry-leading beverages for consumers."
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.
About Corby Spirit and Wine
Limited
Corby Spirit and Wine Limited is a leading Canadian
manufacturer, marketer and distributor of spirits and imported
wines. Corby's portfolio of owned-brands includes some of the most
renowned brands in Canada,
including J.P. Wiser's®, Lot 40®, and Pike Creek® Canadian
whiskies, Lamb's® rum, Polar Ice® vodka and McGuinness® liqueurs,
as well as the Ungava® gin, Cabot Trail® maple-based liqueurs and
Chic Choc® spiced rum and Foreign Affair® wines. Through its
affiliation with Pernod Ricard S.A., a global leader in the spirits
and wine industry, Corby also represents leading international
brands such as ABSOLUT® vodka, Chivas Regal®, The Glenlivet® and
Ballantine's® Scotch whiskies, Jameson® Irish whiskey, Beefeater®
gin, Malibu® rum, Kahlúa® liqueur, Mumm® champagne, and Jacob's
Creek®, Wyndham Estate®, Stoneleigh®, Campo Viejo®, and Kenwood®
wines. Corby is a publicly traded company based in Toronto, Ontario, and is listed on the Toronto
Stock Exchange under the trading symbols CSW.A and CSW.B. For
further information, please visit our website or follow us on
LinkedIn.
About Ace Beverage Group
Inc.
Ace Beverage Group ("Ace") is a leading better-for-you ("BFY")
beverage alcohol company in Canada. Its flagship brand, Cottage Springs,
is one of the biggest and fastest growing ready-to-drink ("RTD")
brands in Canada. Additional
popular brands include Ace Hill and
Cabana Coast. Ace's mission is to develop, launch and market the
world's best tasting BFY alcoholic beverages.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements,
including statements concerning possible or assumed future results
of Corby's operations. Forward-looking statements typically are
preceded by, followed by or include the words "believes",
"expects", "anticipates", "estimates", "intends", "plans" or
similar expressions. These statements are being provided for the
purposes of providing information about management's current
expectations and plans and allowing investors and others to get a
better understanding of our anticipated financial position, results
of operations and operating environment. Readers are cautioned that
such information may not be appropriate for other purposes and are
not guarantees of future performance. Although Corby believes that
the forward-looking information in this press release is based on
information, assumptions and beliefs which are current, reasonable
and complete, this information is necessarily subject to a number
of factors, risks and uncertainties that could cause actual results
to differ materially from management's expectations and plans as
set forth in such forward-looking information. For more information
on the risks, uncertainties and assumptions that could cause
Corby's actual results to differ from current expectations, refer
to the Risks and Risk Management section of our Management's
Discussion and Analysis for the three-and-nine month period ended
March 31, 2023 as well as Corby's
other public filings, available at www.sedar.com and at
https://corby.ca/en/investors/. Corby does not undertake to update
any forward-looking information, whether written or oral, that may
be made from time to time by it or on its behalf, to reflect new
information, future events or otherwise, except as is required by
applicable securities laws. Accordingly, readers should not place
undue reliance on forward-looking statements. All financial results
are reported in Canadian dollars.
NON-GAAP FINANCIAL
MEASURES
Non-GAAP financial measures do not have any standardized meaning
prescribed by GAAP and are therefore unlikely to be comparable to
similar measures presented by other issuers. Management believes
the non-GAAP measures defined above are important supplemental
measures of operating performance and highlight trends in the core
business that may not otherwise be apparent when relying solely on
GAAP financial measures. Management believes that these measures
allow for assessment of the Company's operating performance and
financial condition on a basis that is more consistent and
comparable between reporting periods. EBITDA is equal to earnings
before interest, taxes, depreciation, and amortization. Please
refer to the "Non-GAAP Financial Measures" section of our MD&A
for the three-and-nine month period ended March 31, 2023, as filed on SEDAR for further
information regarding Non-GAAP measures.
SOURCE Corby Spirit and Wine Communications