Portland, Ore.-based spirits-maker Eastside Distilling Inc. said Sept. 16 that it acquired Intersect Beverage LLC's Azuñia Tequila brand.
Azuñia Tequila offers premium tequila products under the Blanco Organic Tequila, Reposado Organic Tequila, Añejo Tequila and Azuñia Black Tequila brands.
The initial consideration for the all-stock transaction will not exceed approximately $14.7 million based on future revenue performance and will be payable about 18 months after the deal's close. It will consist of 850,000 Eastside shares at $6 per share, 350,000 Eastside shares based on the company's stock price 12 months after closing, and additional shares based on the Azuñia business achieving certain revenue targets and Eastside's stock price 18 months after closing.
Further, Eastside agreed to issue additional consideration of up to $1.5 million upon the Azuñia business reaching revenue of at least $9.45 million between the 13th month and the 24th month following the closing of the deal.
For the year ended June 30, Azuñia saw gross sales of about $3.5 million. Eastside said it expects a positive impact on its adjusted EBITDA from the Azuñia operations in 2020.
The spirits producer said the acquisition brings significant product and operational assets to the company, including over 2,600 on-premise points of distribution, a direct sales team, and a product line well positioned in the growing above-premium and luxury tequila categories.
"The team at Azuñia has created strong on-premise adoption of the brand, which, when combined with Eastside's off-premise expertise is expected to benefit not only the Azuñia portfolio, but our other existing brands. We look forward to presenting Azuñia to key retail accounts beginning immediately," Eastside President Robert Manfredonia said in a statement.
Eastside interim CEO Steve Shum said, "There are clear opportunities for us to leverage Eastside's off-premise distribution capabilities for the benefit of Azuñia, while at the same time providing the current Azuñia on-premise sales organization new and exciting brands to present to their customer base. ... We see an opportunity to improve the overall profitability of the brand through a modified SKU strategy between on- and off-premise accounts that many of the larger, more established brands have implemented over the years."
