Digital Wine Ventures to Acquire Parton Wine Group as Nationwide Rollout Continues
Digital Wine Ventures (ASX: DW8) has entered into an agreement to acquire one of Australia’s largest providers of specialist wine and beverage logistics services, Parton Wine Group.
Parton is a 14 year old company with warehousing operations in Sydney, Melbourne and Perth and a loyal customer base of approximately 225 unique suppliers.
In today’s announcement, Digital Wine said the strategic acquisition is aimed at strengthening the capabilities, key metrics, revenue and competitive gap of the company’s online beverage platform, WineDepot.
Specifically, it expects the total number of cases shipped to increase by 220% to around 87,000 per month, while the total order volume is expected to increase by more than 150% to almost 30,000 per month. .
Additionally, the number of unique vendors on the platform is expected to increase by 60% to 600.
Digital Wine CEO Dean Taylor said the acquisition would significantly improve WineDepot’s value proposition and help take its service offerings to the next level.
“We believe that fast, cost effective and reliable order fulfillment is the most effective way to differentiate your customer value proposition and drive sales growth.”
âSo far, we have relied heavily on third-party warehousing and freight providers to support our national logistics network. This model has worked well enough to serve our customers, but as our business continues to grow we need more control over how our supply chain operates, especially during peak times when third-party networks can. become slow and congested, âMr.
He added that having a dedicated fleet of delivery vans and drivers will ensure the company can provide an exceptional experience for professional buyers using its recently launched direct-selling online marketplace, WineDepot Market.
âHaving direct control over our warehouses, with the possibility of offering storage under temperature control, cold chain and customs, will also help us acquire large accounts that have escaped us to date. “
âIt is important to note that the move to a closed-loop network provides the physical foundation required to underpin the other products we offer through our technology platform,â added Mr. Taylor.
Terms of Agreement
The acquisition is expected to close on July 30.
Remuneration for the transaction is entirely performance-based through the issuance of price-complement performance securities, acquired in two installments upon achievement of certain milestones.
The first step will be to achieve a minimum annual revenue of $ 15 million and a minimum annual profit before interest, taxes, depreciation and amortization (EBITDA) of $ 350,000 in fiscal year 2022.
The second stage includes the same minimum revenue and EBITDA targets for fiscal year 2023.
The number of Digital Wine shares to be issued during the acquisition and the exercise of realization of the additional securities will increase according to the improvement in performance.
Digital Wine has received firm commitments to raise gross proceeds of $ 7.5 million, with funds to be used to write off Parton’s existing debts and repay Parton’s debtor financing, as well as for capital expenditure projects. planned and to develop the merged logistics activity.
Subject to shareholder approval, funds will come from a stock offering to institutional and sophisticated investors of 113.46 million shares at an issue price of $ 0.065 each to raise $ 7.375 million , in addition to the participation of the director of Digital Wine of $ 125,000.
Blue Ocean Equities has been appointed to act as lead equity investor.
Parton founder to join WineDepot management team
As part of the acquisition, Parton founder Richard Raddon will join the WineDepot leadership team as managing director of the logistics division, helping with the post-merger integration of his business.
Mr. Raddon has nearly 40 years of experience in the wine warehousing and logistics industry, including 21 years as Warehouse and Distribution Manager for Southcorp Wines (now Treasury Wine Estates).
His son David, who has 25 years of hands-on logistics and operations experience, also joins the WineDepot team in the role of Director of Country Operations.
Mr. Taylor said the company was thrilled to become the custodians of the business that Richard and David spent many years building.
âTheir track record is impressive and their vast experience within the wine industry, combined with nearly 100 knowledgeable, experienced and dedicated employees, significantly strengthens our operational capacity,â he added.
WineDepot Market completes the deployment of the second stage in Melbourne
In a separate announcement, Digital Wine revealed that it had completed the second stage of its rollout to the WineDepot marketplace, opening the platform to commercial buyers in Melbourne last week.
The Melbourne launch follows the Sydney deployment at the end of May.
Mr. Taylor said commercial buyers who have engaged with the platform so far are responding “extremely positively” to the proposal.
âThe initial adoption we have seen so far has been very encouraging and provides a clear indication of the latent demand for the unique solution we have created. “
âThe ability to move more of their wine purchases to a single platform, with a single invoice and a single credit account, has been very appealing to establishments and retailers,â he added. .
WineDepot also set another record, shipping a total of 27,087 cases in June, an increase of 344% from the volume shipped in June 2020.
In addition, the platform has registered 25 more provided to WineDepot Connect, the portal used by suppliers to access WineDepot’s full range of products and services, including logistics, market and direct.