LOUISVILLE - Brown-Forman, known for its extensive portfolio of beverage alcohol brands, has completed the divestiture of its Sonoma-Cutrer Vineyards to The Duckhorn Portfolio, Inc.
The transaction was finalized on April 30, 2024, following an announcement in November 2023 about the agreement. Brown-Forman (NYSE: BFA, BFB) has exchanged the vineyards and brand trademarks for a stake of approximately 21.5% in Duckhorn (NYSE: NAPA), as well as $50 million USD.
The agreement also includes the placement of two Brown-Forman executives on The Duckhorn Portfolio's Board of Directors. Marshall Farrer, serving as Chief Strategic Growth Officer, and Tim Nall, Chief Global Supply Chain and Technology Officer, will join the board, bringing with them their industry experience and strategic insights.
As part of the acquisition, The Duckhorn Portfolio, a group recognized for its luxury wine brands, will now incorporate the Sonoma-Cutrer brand trademarks, its facilities, and six vineyards situated across two appellations. This move is expected to enhance Duckhorn's presence in the luxury wine market.
Brown-Forman Corporation has been an influential player in the beverage alcohol industry for over 150 years, supporting its brands with a global workforce of approximately 5,600 employees. Its products are distributed in more than 170 countries around the world.
In the press release, forward-looking statements were included, which are subject to various risks and uncertainties that could cause actual results to differ from projections. These statements should not be seen as guarantees of future performance and are subject to change.
InvestingPro Insights
In light of the strategic divestiture by Brown-Forman and its resulting stake in The Duckhorn Portfolio, Inc., it's pertinent to consider the financial health and market performance of Duckhorn (NYSE: NAPA). According to InvestingPro data, Duckhorn boasts a market capitalization of $983.29 million USD. The company's gross profit margin is particularly noteworthy, standing at an impressive 54.9% for the last twelve months as of Q2 2024. This figure not only demonstrates Duckhorn's ability to manage its cost of goods sold effectively but also suggests a strong positioning within the luxury wine market post-acquisition of Sonoma-Cutrer.
InvestingPro Tips highlight Duckhorn's attractive valuation metrics, including a Price-to-Earnings (P/E) ratio of 14.79 and an even more favorable adjusted P/E ratio of 14.69 for the same period. These figures indicate that Duckhorn is trading at a low earnings multiple, which could be appealing to value investors. Additionally, the company's PEG ratio stands at 0.8, suggesting that its share price is modest relative to near-term earnings growth expectations.
While six analysts have revised their earnings estimates downwards for the upcoming period, it's important to note that Duckhorn has been profitable over the last twelve months. This profitability, combined with the fact that analysts predict the company will remain profitable this year, provides a degree of reassurance amidst the revisions. Furthermore, Duckhorn does not pay a dividend to shareholders, which could imply that the company is reinvesting its earnings back into the business to fuel growth.
For readers looking to delve deeper into Duckhorn's financials and future prospects, there are 6 additional InvestingPro Tips available, offering a more comprehensive analysis. These can be accessed at Investing.com/pro/NAPA. To enhance your InvestingPro experience, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.