MGP Buys Luxco For $238M Cash, Plus 5M Shares in Stock
MGP Ingredients, based out of Lawrenceburg Indiana, has acquired Luxco Inc. to strengthen their overall market position. Midwest Grain Products of Indiana is best-known for distilling spirits for other private labels. Luxco started as a private label bottler, then evolved into a producer, importer, marketer of distilled beverages. In this deal, MGP buys Luxco for roughly $475M in cash and stocks, while including the Bardstown distillery, Lux Row Distillers.
Luxco Inc. is technically headquartered in St. Louis, MI however they recently expanded their operation to the heart of bourbon country. Lux Row Distillers broke ground on the property in May 2, 2016 in Bardstown, KY. This distillery was launched as an 18,000 square foot facility, which also included 6 barrel warehouses, a tasting room, and event space. It was also added as a new stop on the Kentucky Bourbon Trail. Now, this will bring the Indiana-based distillery to the “Bourbon Capital of The World.”
With the rapid growth of the bourbon hype, folks are looking to cash in on Kentucky’s spirit of choice. Nonetheless, record numbers of bourbon are aging in the Commonwealth currently. More than 10 million barrels of bourbon, which equates to more than 2 barrels for each human to be exact. We will have to wait and see if that number continues to grow, or perhaps gains competition from Indiana. Nonetheless, after MGP buys Luxco, we will see a distinct shift in market alliances.
MGP Shifting Into Higher Value-Added Products
While MGP has gained notoriety for distilling spirits for other private labels, they have also introduced some. Midwest Grain Products of Indiana launched three whiskey brands of its own. Those included, George Remus bourbon, Redemption Rye whiskey, and Rossville Union. Those lines of whiskey have multiple offerings each, such as the newly launched 2021 Rossville Union® Rye Single Barrel Program.
Luxco not only adds a platform to help boost MGP’s future, they also have a portfolio of labels themselves. Some of those whiskies include, Ezra Brooks, Rebel, Blood Oath, David Nicholson and Daviess County. In addition, they own El Mayor and Exotico tequila which are produced in Jalisco, Mexico. Everclear Grain Alcohol, Pearl Vodka, Saint Brendan’s Irish Cream, The Quiet Man Irish Whiskey, and other brands round out the company’s assets. Yellowstone Bourbon Whiskey from Limestone Branch Distillery falls under that umbrella as far as distribution is concerned at least.
Whiskey Business: Long-Term Strategy
This merger immediately improves MGP‘s market position in the whiskey business and branded-spirits sector. Furthermore, this strategic move increases scale and strengthens their overall platform for future endeavors. It will improve MGP’s gross margin and cashflow, as they are a publicly traded company. It is suggested that Luxco generated approximate net revenues of $202 million and 9-liter case volume of 4.8 million in 2020. Lastly, this diversifies their historic position as a spirit production giant. With new players coming into that space, such as Bardstown Bourbon Company, MGP strengthens their position in the whiskey business.
The Luxco shareholders will now have the rights to two of nine Board of Directors seats within the company. The founder, Donn Lux, will be the first of those nominations following the transaction’s close. More details about the merger can be found here.
David Colo of MGP said, “Luxco presents a unique opportunity to take a material step towards realizing our long-term strategy. It significantly expands our product line in the higher-value branded-spirits sector and increases our sales and distribution capabilities across all 50 states.” The President and CEO added, “we have enormous respect for the platform Luxco has built, and we’re excited to add its portfolio of fast-growing premium distilled spirits brands together with strong, cash-flow generating legacy brands. We welcome Donn and his family into the MGP shareholder base and look forward to growing together.”
Donn Lux goes on to outline, “There is a clear strategic fit between Luxco and MGP and I believe this transaction represents a great outcome for Luxco employees and customers.” The CEO of Luxco adds, “I’m excited to continue my involvement with this blend of two well-positioned companies whose strong records of performance and commitment to excellence provide an attractive platform for continued growth.”
Be sure to follow our Instagram and ‘Like’ our Facebook page to get all of the latest Bourbon T-shirt releases, new gear and other fun stuff.
