Duckhorn stockholders will receive $11.10 per share from the all-cash transaction, which is expected to complete ‘this winter’.
Adam Waglay, co-founder of Butterfly Equity, said: ‘This is an incredible opportunity, and we look forward to bringing our specialised 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.’
Duckhorn was established in 1976. The company owns 11 brands, including Duckhorn Vineyards, Decoy, Sonoma-Cutrer and Kosta Browne.
In March 2021, the company went public on the New York Stock Exchange, with NAPA as its ticker, after raising $300m in an IPO.
Shares in Duckhorn initially traded at $19, and they reached an all-time high of $24 three months later.
However, they have been in freefall over the past few years, and they closed at just $5.40 on Friday last week.
Butterfly Equity’s bid represents a significant premium on that share price, and it also amounts to a 65.3% premium to the average price of NAPA stock over the past 90 days.
The Duckhorn Portfolio reported that volume sales declined 4.6% when it announced Q3 earnings in June. However, net income increased by 1.4%.
At the time, CEO Deirdre Mahlan lamented a ‘softer wine market’ but said the company ‘continued to execute against a challenging industry backdrop’.
However, the share price continued to fall, and it was trading on a forward price-to-earnings multiple of less than 10x this month.
Despite the company’s recent challenges, Butterfly Equity believes Duckhorn will enjoy strong growth in the future.
Vishal Patel, a partner in the Los Angeles-based private equity firm, said: ‘As a leading pure-play luxury wine producer, Duckhorn has, in our view, the best portfolio and strongest fundamentals in the industry.
‘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.’
The Duckhorn Portfolio has wrapped up several acquisitions since going public in 2021, including the $400m purchase of Sonoma-Cutrer Vineyards from Brown-Forman.
Mahlan said the deal to take Duckhorn private represents ‘excellent news for the future of our company and for stockholders, who will receive a substantial premium’.
She added: ‘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.’