The share price in craft beer company Gage Roads Brewing Co Limited (ASX:GRB) will be one to watch once it comes out of its trading halt after announcing it has entered into a binding agreement to purchase 100% of the shares in Matso’s Broome Brewing Pty Ltd.
Gage will acquire Matso’s for $13.25 million plus deferred consideration of up to $2.8 million in cash or scrip, which is subject to meeting sales volume targets over a 3-year period.
To fund the acquisition, Gage will raise $10 million from a placement to institutional shareholders at 8.5 cents per share. An additional $2 million will be raised via a share purchase plan at the same price. The company also announced that its securities will remain in a trading halt until the completion of the institutional placement.
The acquisition of Matso’s will greatly expand Gage’s brand portfolio and is projected to deliver over 20% earnings per share accretion with Matso’s currently generating over $2.5 million in earnings before interest, tax, depreciation and amortisation per annum.
Gage and other listed liquor merchants Australian Vintage Group (ASX: AVG) and Treasury Wines Estate Ltd (ASX: TWE) have all managed to deliver large returns in excess of 25% to shareholders over the last 12 months.
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Motley Fool contributor Tim Katavic has no financial interest in any company mentioned. The Motley Fool Australia has recommended Treasury Wine Estates Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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