Nyetimber offers to buy Lakes Distillery

The Lakes Distillery is set to be acquired by English wine producer Nyetimber in a deal that values the whisky maker at £71 million (US$89m).

Cumbria-based Lakes Distillery, known for producing English whisky, gin and vodka, revealed that it had received a recommended cash offer from West Sussex-based Nyetimber. The deal values the firm’s share capital at approximately £46.1 million (US$58m).

Nyetimber, England’s leading sparkling wine producer, noted a ‘sizeable opportunity’ for The Lakes to grow its market share in the UK single malt whisky market, and expand globally.

The directors of The Lakes Distillery believe the terms of the acquisition are fair and reasonable. As such, they plan to recommend that its shareholders vote in favour of the deal at a general meeting.

The Lakes recently announced a new 10-year plan to reach a 1% share of the global luxury dark spirits market by 2030.

James Pennefather, CEO of The Lakes Distillery, said: “This plan entails an additional funding requirement of £10 million [US$12.5m] over the next three years to provide the necessary growth capital to increase production capacity, to further invest in laying down maturing spirit stocks and to grow the brand’s footprint in four international markets.

“The offer by Nyetimber offers the prospect of an owner with the same shared strategic vision and crucially, certainty of funding.”

Located near the Lake District National Park, The Lakes was formed in 2011 and started operations in December 2014. The 11-acre site includes a distillery, visitor centre, shop and bistro.

In considering the offer by Nyetimber, The Lakes directors looked at other funding options in a ‘tough market for raising capital’. They concluded that there is a ‘degree of uncertainty’ around the company’s ability to fully fund it independently without comprising its new 10-year plan.

The English whisky maker has raised and invested more than £30m (US$40.2m) since it was founded, including £1.7m (US$1.2m) from a Crowdcube fundraise in 2017 and a £3.5m (US$4.3m) asset-based loan.

The Lakes has struggled financially in recent years, reporting an audited loss of £1.3m (US$1.6m) in earnings before interest, taxes, depreciation, and amortisation (EBITDA) on net revenue of £5.8m (US$7.3m) for the year ending 30 June 2023. However, unaudited accounts for the seven months to 31 January 2024 showed a year-on-year net revenue growth of 35%.

By joining the Nyetimber group, Pennefather said the company would benefit from quality of production, brand marketing and routes to market.

Pennefather continued: “The Lakes directors are confident that this [acquisition] will confer significant benefits to The Lakes’ long-term prospects both as a brand and as a company and the Nyetimber offer, which values The Lakes at an enterprise value of approximately £71 million, equivalent to a multiple of 12.2 times net revenues for FY23, represents not only the best way to ensure that The Lakes remains fully funded but also provides fair value for existing shareholders at this stage in The Lakes’ growth journey.”

‘Globally relevant’ English drinks group

Nyetimber said The Lakes is the leading English distiller of premium single malt whisky and other spirits, and is distinguished by its Sherry-led house style.

The deal also marks an ‘important step’ in Nyetimber’s aim to create a ‘globally relevant’ English luxury drinks group.

The wine maker also said that it is the ‘right long-term partner’ to support The Lakes’ management team in reaching the goal of becoming a global spirits brand.

Eric Heerema, CEO of Nyetimber, added: “We believe that this potential acquisition represents an opportunity for us to expand our capabilities, drive exciting new growth and support The Lakes in delivering on its ambition to be a globally recognised spirits brand.

“Not only do we have an inherent understanding and strong relationships with the world’s leading luxury restaurants, bars and retailers, but we also have a shared strategic vision.”

The deal, which is subject to a number of conditions, is expected to be completed in the second quarter of 2024.