Good Drinks Australia (ASX:GDA) to acquire Stomping Ground

• Good Drinks Australia (GDA) executes a binding term sheet to acquire Victorian-based brewery Stomping Ground to accelerate growth opportunities in the Victorian market
• Consideration consists of an upfront cash payment of $7 million and the issue of 4.5 million company shares
• It is expected that Stomping Ground will contribute $1.5 million to the company’s earnings in its first year with a target to growing annual volume to four million litres by FY27
• The company expects the acquisition to be complete around November
• Shares in Good Drinks are up 2.68 per cent, trading at 76.5 cents at 2:11 pm AEST

Good Drinks Australia (GDA) has executed a binding term sheet to acquire Victorian-based brewery Stomping Ground to accelerate growth opportunities in Victoria.

Consideration consists of an upfront cash payment of $7 million and the issue of 4.5 million company shares.

It also consists of a trailing five-year performance component which will be funded using debt facilities and ongoing operating cash flows from the business.

It is expected that Stomping Ground will contribute $1.5 million to the company’s earnings in its first year with a target to growing annual volume to four million litres by FY27.

Further, Good Drinks believes that earnings expectation combined with the debt-funding structure provides an earnings-per-share accretive transaction for shareholders in addition to the strategic benefits of developing national brands in key markets.

Good Drinks Managing Director John Hoedemaker said the combined skills, experience and resources will help fast-track the company’s goal of growing independent beer across Australia.

“I’m proud to welcome the Stomping Ground crew to the Good Drinks team. Their wealth of knowledge will not only grow Stomping Ground but will be an asset to the entire Good Drinks business,” he said.

“We know how to integrate established brands into our portfolio and with our strength of people, sales, marketing and distribution expertise we expect to grow the Stomping Ground brands to their full potential.”

Stomping Ground founders Steve Jeffares, Guy Greenstone and Justin Joiner will remain key leaders within the business, also joining Good Drinks as significant shareholders.

Mr Jeffares said the merging of our two businesses will help both the companies become even stronger.

The company expects the acquisition to be complete around November.

Shares in Good Drinks were up 2.68 per cent, trading at 76.5 cents at 2:11 pm AEST.