The Duckhorn Portfolio (NAPA) soared in trading on Monday after the luxury wine company announced that private equity firm Butterfly Equity will acquire the company in a deal worth $1.95 billion.
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Details of DUCK’s Acquisition
According to the terms of the deal, Duckhorn stockholders will receive $11.10 per share in cash, representing a premium of around 65.3% to the volume-weighted average share price of Duckhorn’s common stock over the 90-day trading period ending on October 4. The deal is expected to close later this year and Duckhorn will become a privately held company following the acquisition.
However, Duckhorn announced that its board will have the right to terminate the current agreement and accept a superior proposal from third parties during the 45-day “go-shop” period, which will expire on November 20. This provision allows the company the flexibility to explore better opportunities if they arise soon.
NAPA Announced Better-than-Expected Fiscal Q4 Results
Meanwhile, NAPA also announced its Fiscal Q4 results. The company’s revenues in the fourth quarter increased by 7.3% year-over-year to $107.4 million. This was above analysts’ estimates of $104.7 million. Furthermore, Duckhorn reported adjusted earnings of $0.14 per share, compared to $0.15 per share in the same period last year, exceeding consensus estimates of $0.10 per share.
Is Duckhorn a Good Stock to Buy?
Only three analysts have covered NAPA stock over the past three months, with a consensus rating of Moderate Buy based on two Holds and one Buy. Over the past year, NAPA has declined by more than 40%, and the average NAPA price target of $8 implies an upside potential of 48.2% from current levels.
