Butterfly To Acquire The Duckhorn Portfolio In $1.95 Billion Deal

Under the terms of the Agreement, Duckhorn stockholders will receive $11.10 per share in cash, representing a premium of approximately 65.3% to the volume weighted average share price of Duckhorn’s common stock over the 90-day trading period ending on October 4, 2024. Following the completion of the transaction, Duckhorn will become a privately held company.

Duckhorn was established in 1976 and is a leading pure-play luxury wine producer in the United States with a curated portfolio of premium brands, including Duckhorn Vineyards, Decoy, Sonoma-Cutrer and Kosta Browne. Duckhorn wines are available to luxury consumers on five continents and in over 50 countries. Following the completion of the transaction, the Company will continue to be headquartered in St. Helena, California and will operate eleven winery brands under The Duckhorn Portfolio name.

“This announcement is excellent news for the future of our Company and for stockholders of The Duckhorn Portfolio, who will receive a substantial premium,” said Deirdre Mahlan, Duckhorn President, Chief Executive Officer and Chairperson. “Based on our long history of success and innovation, and our position as one of America’s most successful luxury wine companies, Butterfly believes strongly in The Duckhorn Portfolio and is fully invested in helping us achieve our next phase of growth. Just as important, Butterfly brings a proven track record of strengthening its portfolio companies while helping them advance their long-term strategic objectives. Through our partnership with Butterfly, we expect The Duckhorn Portfolio will have enhanced resources to build on our strong foundation and to further scale our operations. We are excited to work with the Butterfly team to begin writing an exciting new chapter in the story of The Duckhorn Portfolio.”

Founded in 2016, Butterfly is a leading private equity firm dedicated to investing in the “seed-to-fork” food ecosystem in North America with a diverse portfolio including Milk Specialties Global, Chosen Foods, MaryRuth Organics, Orgain, Bolthouse Fresh Foods and QDOBA, among others. Through its deep sector experience, a disciplined and data-driven investment process, and an operations-driven approach to value creation, Butterfly seeks to partner with category-leading food and beverage businesses and deliver consistent investment returns for its investors.

“We are honored to partner with Duckhorn and welcome the Company to the Butterfly family,” said Adam Waglay, Co-Founder and Co-CEO of Butterfly. “This is an incredible opportunity, and we look forward to bringing our specialized expertise and deep food and beverage network to bear to help amplify and accelerate the Company’s mission to have their wine poured wherever fine wines are served throughout North America and the world.”

“As a leading pure-play luxury wine producer, Duckhorn has, in our view, the best portfolio and strongest fundamentals in the industry,” said Vishal Patel, Partner, Butterfly. “We believe the Company’s curated suite of luxury wine brands, structurally advantaged business model, and world-class team have laid the foundation for a powerful, scalable platform, which will continue to drive growth both organically and through strategic acquisitions.”

Transaction Details

The transaction, which was unanimously approved by the Duckhorn Board of Directors, is expected to close this winter, subject to customary closing conditions, including approval by Duckhorn stockholders and the receipt of required regulatory approvals. The completion of the transaction is not subject to a financing condition.

The Agreement includes a customary 45-day “go-shop” period expiring at 11:59 p.m. (Pacific time) on November 20, 2024. During this period, Duckhorn and its advisors will be permitted to solicit, consider and negotiate alternative acquisition proposals from third parties. The Duckhorn Board of Directors will have the right to terminate the Agreement and enter into a superior proposal, subject to the terms and conditions of the Agreement. There can be no assurance that this “go-shop” process will or will not result in a superior proposal, and Duckhorn does not intend to disclose related developments unless and until it determines that such disclosure is appropriate or otherwise required.

Stockholders currently representing a majority of the current outstanding voting power of the Duckhorn common stock have entered into voting agreements pursuant to which they have agreed, among other things, to vote certain of their shares of Company stock in favor of the transaction, subject to certain conditions. The voting support under the voting agreement ceases automatically if the merger agreement is terminated or if the Duckhorn Board of Directors makes an adverse recommendation change.

Upon completion of the transaction, Duckhorn’s common stock will cease to trade and no longer be listed on the New York Stock Exchange.

Fourth Quarter and Full Year 2024 Earnings Conference Call Update

Separately, Duckhorn will announce today its financial results for the fourth quarter and fiscal year ended July 31, 2024, which will be available on the “Investor Relations” section of the Duckhorn website. In light of the announced transaction with Butterfly, Duckhorn has canceled the earnings call previously scheduled for today.

Advisors

J.P. Morgan Securities LLC is acting as financial advisor to Duckhorn, and Ropes & Gray LLP is acting as legal counsel to Duckhorn.

KKR Capital Markets LLC is acting as capital markets advisor to Butterfly, and Kirkland & Ellis LLP is acting as its legal counsel.

In connection with the transaction, the Farm Credit System, led by American AgCredit, Compeer Financial, Farm Credit Services of America and Farm Credit Mid-America, is providing committed debt financing.

About The Duckhorn Portfolio

The Duckhorn Portfolio is North America’s premier luxury wine company, with eleven wineries, ten state-of-the-art winemaking facilities, eight tasting rooms and over 2,200 coveted acres of vineyards spanning 38 Estate properties. Established in 1976, when vintners Dan and Margaret Duckhorn founded Napa Valley’s Duckhorn Vineyards, today, our portfolio features some of North America’s most revered wineries, including Duckhorn Vineyards, Decoy, Sonoma-Cutrer, Kosta Browne, Goldeneye, Paraduxx, Calera, Migration, Postmark, Canvasback and Greenwing. Sourcing grapes from our own Estate vineyards and fine growers in Napa Valley, Sonoma County, Anderson Valley, California’s North and Central coasts, Oregon and Washington State, we offer a curated and comprehensive portfolio of acclaimed luxury wines with price points ranging from $20 to $230 across more than 15 varietals. Our wines are available throughout the United States, on five continents, and in more than 50 countries around the world.

About Butterfly

Butterfly is a Los Angeles, California-based private equity firm that invests exclusively in the $26 trillion food sector. Butterfly is a leading “seed to fork” food ecosystem investor in North America and seeks to generate consistent investment returns through deep sector expertise, a data-driven investment process, and an operations-driven approach to value creation. Since its founding in 2016, the firm has invested in a diverse portfolio of category-leading businesses representing approximately $5 billion in enterprise value including Milk Specialties Global, Chosen Foods, MaryRuth Organics, Pete and Gerry’s, Orgain, Generous Brands, Bolthouse Fresh Foods, QDOBA, and Pacifico Aquaculture. In September 2024, Butterfly also announced the signing of definitive documentation to acquire Rise Baking Company alongside Platinum Equity, which is expected to close in Q4 2024.