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Stock Spirits enters agreements with Quintessential Brands

17 July 2017 07:23

Stock Spirits entered into agreements with Quintessential Brands for the acquisition of a 25% equity interest in Quintessential Brands Ireland Whiskey (QBIW) for up to €18.3m.

QBIW, which owns The Dublin Liberties and The Dubliner Irish Whiskey brands, is the Irish whiskey business of Quintessential Brands. These brands comprise a range of ultra-premium through to standard Irish whiskey products which are currently on sale in over 30 countries, with in excess of 32,000 9L cases sold in the 12 months to 31 March 2017.

The Dubliner Irish Whiskey is the fastest growing Irish whiskey globally. QBIW is currently building The Dublin Liberties Distillery in the centre of Dublin, a state-of-the-art distillery which will also include a visitor and brand experience centre.

Stock Spirits' Investment in QBIW will be primarily used to complete the construction of The Dublin Liberties Distillery, accelerate advertising and promotional investment in the brands, and to finance working capital and stock maturation.

The investment is in line with Stock Spirits' stated strategy of expanding its portfolio through strategic investments and bolt-on acquisitions in order to enhance shareholder value.

Whiskey is the second largest spirits category globally behind vodka and, within the whiskey category, Irish whiskey has been the fastest-growing segment since 2007. Whiskey is also the fastest growing category in Stock Spirits' key markets of Poland and Czech Republic, and this investment will allow the company to capitalise on this trend.

Prior to the investment, QBIW was a 100% owned subsidiary of Quintessential Brands, an independent spirits business which owns, manages, markets and distributes a portfolio of high-quality spirits brands internationally from manufacturing operations in the UK, Ireland and France.

Post the investment, Quintessential Brands will continue to provide blending and bottling services, as well as sales and marketing support; Stock Spirits will be entitled to nominate two of the five directors on the board of QBIW.

The transaction is expected to be earnings enhancing to shareholders in year four; the distillery will take one year to complete and as maturation of Irish whiskey takes at least three years, the benefits will flow in year four from own produced liquid and accelerated investment behind the brands in the early years.

The assets and results of QBIW will be equity-accounted for post the investment.

Consideration will comprise an initial cash payment of €15m for the 25% equity interest, and a deferred cash consideration of up to €3.3m which is payable over a five year period.

The deferred consideration will be subject to certain performance conditions. Stock Spirits will finance both the initial and deferred cash consideration, if payable, using undrawn debt facilities.

As at 31 March 2017, QBIW, which historically was only the land holding company and did not include the brands, had gross assets of €2.3m and did not trade in the year.

Since then, the trade and assets of the brands were transferred into QBIW, having previously sat within other Quintessential Brands subsidiaries.

Following the investment, key members of QBIW's existing management team, including Darryl McNally (General Manager), Colin O'Neill (CFO) and Sinead O'Frighil (Marketing Director) will continue in their current roles.

In addition, Enzo Visone and Warren Scott, Co-Founders of Quintessential Brands, will remain part of the executive management team of QBIW.

Story provided by StockMarketWire.com

Related Company: STCK

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