SYDNEY, AUSTRALIA: Good Drinks Australia (ASX: GDA) has executed a binding term sheet to acquire leading Victorian-based brewery Stomping Ground for $7 million cash, 4.5 million GDA Ordinary Shares and a trailing 5-year performance component, a bourse filing noted.
The transaction will be funded using debt facilities and on-going operating cashflows from the business and will not require an equity raising to execute. The transaction is scheduled to complete in Q2 FY22.
Based on current volumes of around 1.5 million Litres and current venue performance, Stomping Ground is expected to contribute $1.5m to GDA earnings in its first year with a target to growing annual volume to 4 million Litres by FY27.
In addition to the strategic benefits of developing national brands relevant to key markets, the earnings expectation combined with the debt-funding structure provides an earnings-per-share accretive transaction for GDA Shareholders.
Stomping Ground founders Steve Jeffares, Guy Greenstone and Justin Joiner will remain key leaders within the business, also joining Good Drinks Australia as significant shareholders.
Their continued involvement will provide operational continuity for Stomping Ground and further knowledge and expertise to the Good Drinks management team.
Stomping Ground’s Steve Jeffares is excited about the opportunity that joining Good Drinks Australia represents: “There has been a long courtship as we got to know each other, and Guy, Justin and I are excited and confident that the merging of our two businesses will help us both become even stronger”, explains Jeffares, who will also sit on GDA’s Executive team.
“There’s a shared ambition for Stomping Ground to become Victoria’s number one independent beer brand so this really is a win for fans of our beer. With GDA’s help, our beers and brand will be more visible and available than ever before,” adds Guy Greenstone.
Good Drinks Australia Managing Director John Hoedemaker agreed: “We’re excited about Stomping Ground joining the Good Drinks family and I know we can achieve more being on the same team. With a shared value of continuing to grow independent beer across the country, our combined skills, experience, and resources will help fast-track our goals. We’re looking forward to working with Steve, Guy, and Justin to help super-charge Stomping Ground and see it achieve its goal of becoming Victoria’s leading independent beer brand.
“I’m proud to welcome the 100+ Stomping Ground crew to the Good Drinks team. Their wealth of knowledge will not only grow Stomping Ground but will be an asset to the entire Good Drinks business.
“We know how to integrate established brands into our portfolio and with our strength of people, sales, marketing and distribution expertise we expect to grow the Stomping Ground brands to their full potential.”