Duckhorn Portfolio Inc (NYSE: NAPA) rallied more than 100% this morning after Butterfly Equity said it will buy the luxury wine company for about $1.95 billion.
The all-cash agreement values each share of NAPA at $11 – a sharp increase from their previous close of $5.40.
Duckhorn will delist from the New York Stock Exchange and operate as a privately held company upon completion of the announced transaction.
Butterfly Equity has agreed to a 45-day “go-shop” period during which Duckhorn Portfolio can look for better proposals, as per the press release on Monday.
Duckhorn stock has now recovered back to the price at which it started the year 2024.
Duckhorn stock is up also on solid Q4 earnings
Butterfly Equity brings “enhanced resources” that will enable Duckhorn Portfolio to “build on our strong foundation and further scale our operations,” as per its chief executive Deirdre Mahlan.
The California based company expects the deal to close in the final quarter of 2024 provided that it meets the customary closing conditions, including shareholders and regulatory approvals.
In the press release, Vishal Patel of Butterfly dubbed NAPA the “best portfolio” as it has the “strongest fundamentals in the industry” as well. The private equity firm has picked Kirkland & Ellis as its legal counsel for the transaction.
Also on Monday, Duckhorn Portfolio reported its financial results for the fourth quarter that topped Street estimates.
The company earned 14 cents a share (adjusted) on $107.4 million in revenue. Analysts, in comparison, were at 10 cents per share and $106.55 million, respectively.
Note that Duckhorn stock does not currently pay a dividend yield.
NAPA is well-positioned for future growth
Duckhorn also improved its adjusted EBITDA margin by a 300 basis points to 37.2% in its Q4.
The winery portfolio is well-positioned for “solid growth and profitability” in the coming years, especially after the acquisition of Sonoma-Cutrer in the fourth quarter, CEO Mahlan told investors in a press release today.
Following the Butterfly Equity announcement, however, NAPA has decided against hosting its earnings call on Monday (October, 7th).
Duckhorn stock has been a disappointment for its shareholders since the start of this year but a premium valuation that it has won from Butterfly Equity hints at a happy ending for those currently invested in NAPA.
Heading into today, Wall Street had a consensus “overweight” rating on shares of Duckhorn Portfolio.
The average price target sat at $9.0 that they have already surpassed following the buyout proposal and Q4 earnings release on Monday.
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