Napa Valley winemaker The Duckhorn Portfolio Inc has bought luxury chardonnay maker Sonoma-Cutrer Vineyards for US$400 million in cash and shares from current owner Brown-Forman (NYSE:BF.B) Corp.
Founded in 1973, Sonoma-Cutrer is one of the biggest US luxury chardonnay brands, an area where Duckhorn said it has limited presence.
Under the terms of the deal, Brown-Forman (NYSE:BF.B) will receive US$50 million in cash and US$350 million of shares, giving it a 21.5% stake in its fellow New York-listed group and the right to nominate two directors to the board.
The acquisition is a strategic move for Duckhorn, expected to boost its luxury wine offerings and financial performance, with bottles of Sonoma-Cutrer chardonnay selling for US$20 to US$50 per bottle, with anything above US$15 classed as luxury.
Sonoma-Cutrer, which owns six estate vineyards spanning 1,121 acres in the Russian River Valley and Sonoma Coast appellations, made sales of US$84 million in the 12 months ended 31 July.
“Sonoma-Cutrer is among the fastest-growing major brands in the luxury Chardonnay category. We see opportunity to further accelerate that growth and enhance operating margins of the combined business,” said Deirdre Mahlan, Duckhorn’s interim president, chief executive officer and chairperson.