Southern Glazer’s Wine & Spirits (Southern Glazer’s) announced the successful closing of its acquisition of substantially all of the assets of Horizon Beverage Group, Inc. (Horizon), one of New England’s premier alcohol distributors, including all of Horizon’s operations and wine, spirits and beer portfolio. Effective immediately, Horizon’s operations in Massachusetts and Rhode Island will operate under the name Southern Glazer’s Beverage Company.The acquisition marks an “exciting expansion” for Southern Glazer’s, adding Massachusetts and Rhode Island as the 46th and 47th markets in its U.S. footprint, alongside operations in Canada and the Caribbean.
Background
Capstone sourced the engagement based on a long-standing relationship with the Epstein famiiy owners. Horizon first sold there control state brokerage business in NH & VT to RNDC in 2022 as the business was a low margin business and offred little synergies with other strategic buyers. A year later it became evident that Southern Glazer has strong interest in the business and in 2023 deeper discussions resulted in a signed LOI.
Solution
Southern Glazer was convinced that the Company's strong performance during 2022 & 2023 was not sustainable and agreed upon a purchase price multiple that would be applied to 2024 EBITDA, which the Southern Glazer expected to be lower that 2023. However, the Company's EBITDA during 2024 grew significantly, and as a result the Company's valuation was substantially higher than initially expected.. The purchase price offer included a collar to ensure that valuation fell within a mutually acceptable range and the end result was the total enterprise value exceeded 12x LTM EBITDA. While the transaction included the transfer of distribution rights for over 200 products by Horizon to S-G, Capstone was able to sucessfully negotiate the transfer approval for all of Horizon's brands and avoid any "transfer value leakage" by the client during the closing process.
