Duckhorn Portfolio Inc. (NYSE: NAPA), a luxury wine company, rallied by more than 100 percent today after Butterfly Equity announced it would buy the company for $1.95 billion.
The all-cash deal values each share of NAPA as $11, a dramatic increase from their previous closing price of $5.40.
Duckhorn will delist itself from the New York Stock Exchange upon completion of the announced deal and become a privately-held company.
According to a press release issued on Monday, Butterfly Equity has agreed that Duckhorn Portfolio will have 45 days to “go shopping” for better proposals.
Duckhorn stock is now back at the price it was in 2024.
Duckhorn stock also up on solid Q4 earnings
According to Duckhorn Portfolio’s chief executive Deirdre Mahalan, Butterfly Equity will bring “enhanced” resources that will allow Duckhorn Portfolio “to build on our strong foundation and scale our operations further.”
The California-based company expects that the deal will close in the fourth quarter of 2024, provided it meets the usual closing conditions including shareholder and regulatory approvals.
Vishal Patel, of Butterfly, called NAPA “the best portfolio” in the press release because it also has “the strongest fundamentals in the sector”. Kirkland & Ellis has been selected by the private equity firm as its legal counsel in this transaction.
Duckhorn Portfolio also reported its financial results on Monday that exceeded Street estimates.
The company earned (adjusted), 14 cents per share on $107.4 millions in revenue. Analysts were predicting 10 cents a share and $106.55 millions, respectively.
Duckhorn does not pay a dividend at this time.
NAPA is well positioned for future growth
Duckhorn’s adjusted EBITDA margin also increased by 300 basis points, to 37.2% during its Q4.
In a press statement today, CEO Mahlan informed investors that the winery portfolio was well-positioned to achieve “solid growth and profitability” over the next few years, particularly after the acquisition of Sonoma-Cutrer during the fourth quarter.
NAPA, however, has decided to cancel its earnings call for Monday, October 7th .
Duckhorn stock is a disappointment to its shareholders. It has been since the beginning of this year. However, a premium valuation it has received from Butterfly Equity suggests that there will be a happy end for those who are currently invested in NAPA.
Wall Street had given Duckhorn Portfolio shares an “overweight” consensus rating before today.
The average price target was $9.0, which they have already exceeded following the buyout offer and Q4 earnings announcement on Monday.
This post Duckhorn stock rallies 100 percent as Butterfly Equity values wine company at $1.95 Billion may be updated as new developments unfold.
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