Indiana based company MGP Ingredients, Inc has reached a definitive agreement to purchase Luxco, Inc., and its affiliated companies for an estimated $475 million dollars. Luxco is maker of such brands as Ezra Brooks® Bourbon Whiskey, Daviess County® Straight Bourbon Whiskey, Yellowstone® Bourbon Whiskey, El Mayor® Tequila, and Everclear®.
David Colo, president and CEO of MGP Ingredients, Inc. states:
Luxco presents a unique opportunity to take a material step towards realizing our long-term strategy. It significantly expands our product line in the higher-value branded-spirits sector and increases our sales and distribution capabilities across all 50 states. We have enormous respect for the platform Luxco has built, and we’re excited to add its portfolio of fast-growing premium distilled spirits brands together with strong, cash-flow generating legacy brands. We welcome Donn and his family into the MGP shareholder base and look forward to growing together.”
Under the terms of the sale, the Luxco shareholders will receive $238 million in cash and will receive 5.0 million shares of MGP common stock, valued at approximately $238 million based on a 20-day volume-weighted average price as of January 11, 2021. Luxco shareholders will also have the right to nominate up to two of the Company’s nine Board directors.
My Take
I'm torn on how I think about this transaction. What I loved about Luxco was that since they were smaller, they were able to focus on quality and getting things right as well as testing and bringing new products to market. Being acquired by MGP makes me feel like they will be more profit driven leading to less innovation.
On the other side, having the financial backing of a giant company like MGP should hopefully allow for the production of more barrels of bourbon and should lead to increased distribution, which would certainly be great for Ohio.
The best case scenario is that the acquisition allows Luxco to expand their brands while also having the financial backing to innovate and deliver even more products and brands. Either way, this is a great example of why we should pool our money and create our own bourbon company that can be sold for hundreds of millions of dollars...
What do you think? Drop a note in the comment box below.
Source: MGP
I totally understand the torn side. I'm drinking Rebel right now and am a big fan of blood oath, just really like the overall presentation.
ReplyDeleteI would think they would still be operating separately but with the funding and supplies to take on more creative projects and expand footprint. It should be a good opportunity to let Lux set itself up to take more risks given the growth of the premium, unique section of the market.