Mighty Craft to buy SA's Mismatch Brewing, 78 Degrees, Lot 100 and more for $47 million

Mighty Craft to buy SA's Mismatch Brewing, 78 Degrees, Lot 100 and more for $47 million

Three beloved South Australian boutique alcohol brands and the majority of Adelaide Hills-based cellar door Lot 100 will be acquired by listed craft beverage accelerator Mighty Craft (ASX: MCL) in a deal worth $47 million.

MCL is set to raise $29 million for funding the "transformational" acquisition of Adelaide Hills Group (AHG), whose brand portfolio that also comprises Mismatch Brewing Company, MK Wine Solutions and The Hills Distillery is expected to deliver $78.7 million in revenue for MCL in FY22.

Located just 40 minutes by car from the Adelaide CBD, AHG has four established and distinct companies offering craft spirits, craft beer and craft cider, as well as a destination distillery, cellar door, restaurant and function centre.

The target's portfolio includes The Hills Cider Company (with six core cider products), 78 Degrees (with award-winning whisky, gin, vodka & RTD products), and Mismatch Brewing Co (SA's largest independent craft beer operator).

Mighty Craft expects the acquisition will result in spirit production capacity growing to 1.5 million bottles in FY22, making MCL one of the largest independent Australian craft spirit producers.

"Both Mighty Craft and the Adelaide Hills team are passionate about creating and growing, at scale, local craft beverage brands," Mighty Craft managing director Mark Haysman said.

"This increased scale and the opportunity to realise significant synergies will truly leverage our operating platform and enhance Mighty Craft's ability to accelerate growth of new and existing craft businesses.

"A key ingredient to achieving our objective is having the talented and highly specialised production and management team from these four fantastic businesses come join us at Mighty Craft to help integrate the brands, from a production, distribution, sales and marketing perspective, into the Mighty Craft portfolio."

As part of the deal, AHG's key management personnel will be retained as they continue to drive growth for all of the company's brands.

"We are very excited to join forces with Mighty Craft to work towards our mutual ambition to become Australia's leading craft beverage company," AHG director Toby Kline said.

"Our shared cultural values, vision and entrepreneurial and innovative approach to growing craft beverage businesses makes Mighty Craft a highly compatible fit for our brands and our people.

"We have joined forces because we believe the two businesses are stronger together and can really create something special over the coming years."

Approximately 90.63 million new shares in MCL will be issued under the fully underwritten placement to raise $29 million.

At $0.32 per share, the raise represents approximately 30 per cent of MCL shares on completion of the acquisition which remains subject to shareholder approval at the company's upcoming AGM to be held in early July 2021.

The proposed acquisition is the latest move Melbourne-based Mighty Craft has made on the booming South Australian alcohol sector, coming just under five months after the company took a controlling interest in Adelaide's Sparkke - a brewery with an edge for social justice.

Mighty Craft's stable of brands also includes Jetty Road Brewery, Kangaroo Island Spirits, Splipstream Brewing, Foghorn Brewery, Balistic Beer Co, Sauce Brewing Co, Brogan's Way Distillery, Seven Seasons and Torquay Beverage Co.

The deal in February gave MCL a 61 per cent equity stake in Sparkke, up from 42 per cent which it had held since 2019.

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