Shares of Duckhorn Portfolio, Inc. (NAPA) experienced a significant surge in pre-market trading on the NYSE, more than doubling in value following the company's announcement on Monday regarding its fourth-quarter adjusted earnings that surpassed market expectations. The luxury wine producer also disclosed an impending acquisition by private equity firm Butterfly Equity in a substantial $1.95 billion all-cash deal. Despite reporting higher revenues, Duckhorn's fourth-quarter profit saw a decline.
The company has entered a definitive agreement to transition to a privately-held entity through a deal with Los Angeles-based Butterfly Equity, a private equity firm that focuses on the food and beverage industry. According to the terms of the agreement, Duckhorn stockholders will receive a cash payment of $11.10 per share. This price reflects a premium of approximately 65.3 percent over the volume-weighted average share price of Duckhorn’s common stock for the 90-day period concluding on October 4.
The Duckhorn Board of Directors has unanimously approved the transaction, which is anticipated to conclude this winter, contingent upon standard closing conditions. Post-transaction, Duckhorn's common stock will no longer be traded or listed on the NYSE, marking its transition to a privately held company. The company will maintain its headquarters in St. Helena, California, continuing operations under the Duckhorn Portfolio brand, encompassing eleven winery brands.
The completion of this acquisition does not hinge on any financing condition, the company confirmed. Included in the agreement is a conventional 45-day "go-shop" period, ending on November 20, during which Duckhorn and its advisors may seek, evaluate, and negotiate alternative acquisition offers from other parties.
For its fourth quarter, Duckhorn reported a net income of $11.30 million or $0.08 per share, down from $17.77 million or $0.15 per share in the previous year. Adjusted earnings for the period amounted to $20.42 million or $0.14 per share, up from $16.74 million or $0.15 per share the previous year. Analysts surveyed by Thomson Reuters had, on average, forecasted earnings of $0.10 per share, typically excluding special items from their projections.
The company's sales for the quarter increased by 7.5 percent, reaching $108.97 million, up from $101.36 million the previous year. Net sales reached $107.40 million, showing a 7.3 percent rise from $100.10 million in the prior year. However, excluding the impact of Sonoma-Cutrer, net sales reflected a 13.9 percent decline.
In pre-market trading on the NYSE, Duckhorn shares surged to $10.86, marking an increase of 101.11 percent.
