News Alert: Duckhorn Agrees To Acquire Sonoma-Cutrer For $400 Million

The Duckhorn Portfolio has agreed to acquire fellow California winery Sonoma-Cutrer from Brown-Forman for $400 million in a combination of stock and cash, giving Brown-Forman a 21.5% stake in Duckhorn. Sonoma-Cutrer is known for Chardonnay ranging from $20 to $50 per bottle. Sonoma-Cutrer owns six estate vineyards spanning 1,121 acres in both the Russian River Valley and Sonoma Coast appellations.

Duckhorn says the move improves its position as “a leading luxury ($15+ per bottle) 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.” Sonoma-Cutrer had sales of $84 million in the 12 months through July.

According to Impact Databank, Sonoma-Cutrer had volume of 543,000 cases last year, up 17% from the previous year, placing it among the fastest growing wine brands in the U.S. market.

Under the terms of the deal, Brown-Forman will receive 31.5 million shares of Duckhorn’s common stock, valued at approximately $350 million, as well as $50 million in cash, and will nominate two directors to Duckhorn’s board.

“Sonoma-Cutrer is among the fastest-growing major brands in the luxury Chardonnay category,” said Deirdre Mahlan, Duckhorn’s interim president, CEO and chairperson. “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.”

“We believe The Duckhorn Portfolio provides the capabilities, expertise, and focus to take the Sonoma-Cutrer wines to the next level,” said Brown-Forman president and CEO Lawson Whiting. “The Duckhorn Portfolio has some of the world’s most-respected luxury wine brands and Brown-Forman looks forward to participating in their future growth through a minority equity stake and board membership.” —Daniel Marsteller

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