English winemaker Nyetimber has agreed a deal in principle to acquire The Lakes Distillery.
The terms of the proposed transaction, announced by The Lakes Distillery in a stock exchange filing, value the English spirits producer at approximately £46.1m, equivalent to 12.2 times its net revenues for its fiscal year 2023.
If the deal is approved, Nyetimber will also take on the Cumbria-headquartered business’s net financial debt, totalling around £26.7m.
Investors that currently own 28% of The Lakes’ shares have already agreed to sell to Nyetimber, with the offer set to go to a shareholder vote.
The Lakes’ directors said they unanimously recommended its shareholders approve the deal.
The offer by Nyetimber offered “the prospect of an owner with the same shared strategic vision and, crucially, certainty of funding”, said The Lakes CEO James Pennefather.
“By joining the Nyetimber family of companies, The Lakes will benefit in particular in terms of quality of production, brand marketing and routes to market,” he added.
Nyetimber said it believed there was “a sizeable opportunity for The Lakes to grow its market share within the UK single malt whisky market” as well as internationally.
The “quality and profile” of its products and English provenance would “resonate well with consumers”, it added.
“We believe this potential acquisition represents an opportunity for us to expand our capabilities, drive exciting new growth and support The Lakes in delivering on its ambition to be a globally recognised spirits brand,” said Nyetimber CEO Eric Heerema.
He added: “Not only do we have an inherent understanding and strong relationships with the world’s leading luxury restaurants, bars and retailers, but we also have a shared strategic vision.”
Nyetimber is one of the UK’s leading English sparkling winemakers with nearly 1,000 hectares of land (of which 374 hectares is currently under vine) across 11 vineyards in West Sussex, Hampshire and Kent.
The company is solely owned by Heerema, who purchased it for £7.4m in 2006.
The Lakes Distillery was founded by Nigel Mills and Paul Currie in 2012. It makes blended and single malt whiskies as well as gins and vodkas.
The company remains lossmaking, having invested heavily in laying down stock, as well as expanding its distilling operations. In the financial year ended 30 June 2023 it reported an EBITDA loss of £1.3m on net revenue of £5.8m.
Pennefather, a former Diageo and William Grant & Sons executive, became The Lakes Distillery’s CEO last June.
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