Why is the Digital Wine (ASX:DW8) share price on ice?

Here’s why the Digital Wine share price is frozen on Wednesday.

| More on:
A dollar sign embedded in ice, indicating a share price freeze or trading halt

Image source: Getty Images

The Digital Wine Ventures Ltd (ASX: DW8) share price is in the freezer in preparation for a major acquisition and capital raise.

The company is expected to announce news of its latest addition and equity boost sometime between now and Friday.

Until then, the Digital Wine share price will stay halted at its previous closing price of 6.6 cents.

The wine distributor and operator of wholesale distribution platform, WINEDEPOT, is no stranger to acquisitions. Let’s take a look at Digital Wine’s most recent acquisition and capital raise.

Digital Wine share price freezes over

The Digital Wine share price has been put on ice this morning ahead of the company announcing a new acquisition and capital raise.

Unfortunately, market watchers eager for more details might be waiting until Friday. If the company doesn’t release the announcement by then, its shares will resume trading as per normal.

Though, it hasn’t been that long since Digital Wine graced the market with news of its most recent acquisition and capital raise.

In July the company acquired Parton Wine Group. While Digital Wine’s consideration for Parton is through earn-outs via scrip, the company still raised $7.5 million.

Around $7.38 million was raised through a share placement for institutional and sophisticated investors. Within the placement, Digital Wine offered new shares for 6.5 cents apiece. The leftover $125,000 came from director participation.

Of the $7.5 million, $2.8 million was to pay Parton’s existing liabilities and $1.2 million to repay Parton’s debt. Another $1 million would fund Parton’s planned projects. The remaining $2.5 million went towards expanding the merged logistics business.

At the time, the 6.5 cent price tag represented a 28.6% discount to Digital Wine’s last traded share price and a 20% discount to its 15-day volume weighted average price.

Unfortunately, the market reacted poorly to Digital Wine’s most recent acquisition and capital raise. Digital Wine’s stock was frozen in preparation for the news, as it is today. It fell 11% when it emerged.

So, it’s safe to say that plenty of eyes will be fixed on the Digital Wine share price between now and Friday morning.

Should you invest $1,000 in Digital Wine right now?

Before you consider Digital Wine, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Digital Wine wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Consumer Staples & Discretionary Shares