MGP Buys Luxco

In a major business deal announced today, MGP Ingredients has agreed to buy Luxco.

The total purchase price is reportedly $475 million.

This transaction immediately increases MGP’s scale and market position in the branded-spirits sector, the company says, and strengthens its platform for future growth of higher value-added products.

The deal seemingly follows MGP’s path in recent years torwards becoming more of a consumer-focused, brand-driven company. Already known as a leading supplier of sourced spirits, MGP has launched a growing stable of house brands. Also, MGP bought New Columbia Distillers in March of 2020.

The Luxco portfolio includes Ezra Brooks Bourbon Whiskey, Daviess County Straight Bourbon Whiskey, Yellowstone Bourbon Whiskey, El Mayor Tequila and Everclear. For the 12-month period ending October 31, 2020, Luxco generated approximate net revenues of $202 million and 9-liter case volume of 4.8 million, the company reports.

“Luxco presents a unique opportunity to take a material step towards realizing our long-term strategy,” says David Colo, president and CEO of MGP Ingredients, Inc. “It significantly expands our product line in the higher-value branded-spirits sector, and increases our sales and distribution capabilities across all 50 states.”

“We have enormous respect for the platform Luxco has built, and we’re excited to add its portfolio of fast-growing premium distilled spirits brands together with strong, cash-flow generating legacy brands,” Colo adds.

Under the terms of the agreement, Luxco shareholders will receive aggregate cash consideration of $238 million. Shareholders will also receive 5.0 million shares of MGP common stock, valued at approximately $238 million based. Added together, that generates a total sale price of $475 million.

“There is a clear strategic fit between Luxco and MGP and I believe this transaction represents a great outcome for Luxco employees and customers,” says Donn Lux, chairman and CEO of Luxco. “I’m excited to continue my involvement with this blend of two well-positioned companies whose strong records of performance and commitment to excellence provide an attractive platform for continued growth.”

The cash portion of the purchase price, plus transaction-related expenses, will be financed by borrowings under MGP’s existing revolving credit facility. The transaction is anticipated to be completed during the first half of 2021, subject to regulatory approvals and customary closing conditions.

Nomura Securities International, Inc. acted as exclusive financial adviser to MGP in this transaction. Stinson LLP acted as MGP’s legal counsel. Perella Weinberg Partners acted as exclusive financial adviser to Luxco, and Bryan Cave Leighton Paisner LLP acted as Luxco’s legal counsel.

This follows recent news that MGP named its first lead master distiller.