Drinks Americas Announces Letter of Intent to Acquire Global Beverages Asia Ltd.(1)
By 2009-3-24 8:57:56
WILTON, Conn., Mar 23, 2009 (BUSINESS WIRE) -- Drinks Americas Holdings, Ltd. (OTC BB: "DKAM"), a leading owner, developer and marketer of global premium beverages, announced today that it has entered into a non-binding Letter of Intent to purchase, for stock, "Global Beverages Asia Ltd.", the new name for the combination of Yarraman Winery, Inc. ("Yarraman") and Asia Distribution Solutions Ltd. ("ADSL"), a combination which has existing distribution operations and large retail stores in China for its proprietary and non-proprietary wines, spirits, beers, mixers, and soft drinks.
The acquisition by Drinks Americas is subject to completion of due diligence, the negotiation of definitive agreements, and the satisfaction of legal requirements. Rodman and Renshaw LLC is acting as financial advisor to Drinks Americas, and Newbridge Securities Corp. is acting as advisor to Yarraman on the transaction.
Drinks Americas is a leading owner and marketer of premium and iconic beverages that include Kid Rock Beer, Willie Nelson's Old Whiskey River Bourbon, Trump Super Premium Vodka, Newman's Sparkling Juice Drinks, Rheingold Beer, Leyrat Estate Bottled Cognacs, and an additional line of spirits to be introduced in partnership with Interscope and Dr. Dre. The Drinks Americas portfolio will be added to the products currently sold by ADSL in China and Yarraman's global sales and export arm selling wines in Australia, Europe, and throughout the Pacific Rim.
ADSL currently has Chinese operations in Shanghai, Chengdu, Beijing, and Shenzhen through wholly-owned distributors. The company also sells product in China through its 51% owned chain of "big box" or "WineMall " stores, which ADSL expects to grow to approximately fifty outlets over the next three years.
In addition to its proprietary labels, ADSL distributes Heineken, Tiger Beer, Pabst, Tsingtao, Sunkist Sodas and Snapple Beverages as well as Yeshu Coconut Juice, Jia Jia Liang Teh Herbal Drinks and Kelsoloch Mixers. The company also provides procurement and logistics in China for the purchase of wine, spirits and beverages for supermarkets, hotels, high-end restaurants, bars and cafes. The company operates nine "store within a store" operations at Times Ltd. Hypermarket with the Pine Group.
The wine market in China is approximately US$4.8 billion, with consumption growing at an estimated 6.5 times faster than the overall global market. The beer market is the largest consuming beer market in the world at US$36.1 billion and growing at an estimated rate of 8.5% per annum. The spirits market is approximately US$6.1 billion and growing at an estimated rate of 1.5% per annum. (SOURCE: Data Monitor) The Drinks Americas portfolio of products will be added to the products sold by ADSL's distribution and retail operations in China.
ADSL is in the process of being acquired by Yarraman, a successful Australian- based vineyard and winery operation, which, together with its Jugiong Vineyard, has the capacity to produce 160,000 cases of wine per year, giving the company significant capacity to meet the growing demand for wines in China through its WineMall retail outlets. In addition to Yarraman Wines, the company also sells Ironstone, Santa Carolina, Bass Phillip, Vine San Pedro and La Barcia wines. Yarraman has tangible assets of US$45 million.
J. Patrick Kenny, Chairman and CEO of Drinks Americas, stated, "Consumption of beverages and the size and scale of the distribution and retail market in China is something DKAM wants to be a part of. When we met to discuss and review the strategic opportunity, an immediate vision of the scale and scope of this business opportunity for Drinks began to take shape. We see it as an opportunity for the combined companies to grow in the two largest markets in the world, supply profitable and proprietary product, continue to scale our iconic business model and create substantial shareholder value. Assuming a consummation of this acquisition, the entire business enterprise will have more than $20 million in current sales, over $40 million in net tangible assets, accretive earnings, and a growing business infrastructure capable of efficient international distribution of proprietary products."
Michael Kingshott, the Chairman of ADSL, stated "The bringing together of two very dynamic companies which today are focused on two of the world's largest markets is very compelling. Drinks Americas has made significant progress in establishing a set of global iconic brands in America. The opportunity to expand and distribute their range of product in addition to those that we already represent in China will create tremendous growth. For the group to access instantly these two markets represents a unique opportunity for growth. The fact that both companies are so complementary in their brand offerings makes for a very exciting future that we intend to capitalize on, both in America and China."
From marketwatch.com