Lakes Distillery backs multimillion-pound takeover approach from London group

The Lakes Distillery has announced a recommended takeover deal that values its share capital at £46.1m.

This implies an Enterprise Value of £71m for the business, based in The Lake District National Park, based on The Lakes directors’ expectation for net financial debt as at May 31, 2024, which comprises £25.8m of financial debt and associated make whole payments, less £900,000 of cash and cash equivalents.

London-based Nyetimber Wines and Spirits Group, which has a vineyard in West Chiltington, West Sussex, is behind the acquisition, which could be completed within the second quarter of 2024.

Nyetimber said it believes that The Lakes is the leading English distiller of premium quality Single Malt Whisky and other premium spirits, differentiated by its characteristic Sherry-led house style, wood forward approach and depth of flavour.

Having significantly expanded capacity over the past few years, Nyetimber believes there is a sizeable opportunity for The Lakes to grow its market share within the UK Single Malt Whisky market, as well as to continue to expand its presence internationally, where Nyetimber is of the view that the quality and profile of The Lakes’ products and English provenance will resonate well with consumers.

Nyetimber believes it is the right long term partner to support The Lakes’ management team to deliver on its ambitions to become a leading international spirits brand, with the acquisition marking an important next step in Nyetimber’s plan to create a globally relevant, English luxury drinks group.

The Lakes directors intend unanimously to recommend that The Lakes shareholders vote in favour of the deal which will be implemented by way of a court sanctioned scheme of arrangement. However, Nyetimber reserves the right to implement the acquisition by way of a takeover offer.

James Pennefather, The Lakes CEO, said: “The Lakes board is enthusiastic about its ambitious new 10-year plan to achieve a one per cent share of the global luxury dark spirits market by 2030.

“This plan entails an additional funding requirement of £10m over the next three years to provide the necessary growth capital to increase production capacity, to further invest in laying down maturing spirit stocks and to grow the brand’s footprint in international markets.

“The offer by Nyetimber offers the prospect of an owner with the same shared strategic vision and, crucially, certainty of funding.”

He added: “By joining the Nyetimber family of companies, The Lakes will benefit, in particular in terms of quality of production, brand marketing and routes to market.

“The Lakes Directors are confident that this will confer significant benefits to The Lakes’ long term prospects both as a brand and as a company and the Nyetimber offer, which values The Lakes at an enterprise value of approximately £71m, equivalent to a multiple of 12.2 times net revenues for FY23, represents not only the best way to ensure that The Lakes remains fully funded, but also provides fair value for existing shareholders at this stage in The Lakes’ growth journey.”

Eric Heerema, CEO of Nyetimber, said: “We are excited by the prospect of acquiring The Lakes, the leading English distiller of premium quality Single Malt Whisky, Gin, and Vodka.

“We believe that this potential acquisition represents an opportunity for us to expand our capabilities, drive exciting new growth and support The Lakes in delivering on its ambition to be a globally-recognised spirits brand.

“Not only do we have an inherent understanding and strong relationships with the world’s leading luxury restaurants, bars and retailers, but we also have a shared strategic vision.”

Lakes Distillery whisky still

In September 2021, The Lakes completed a major expansion at its distillery in partnership with EJ Musk Process Services which was contracted to design, build, and install eight new washbacks that tripled whisky production at the site.

The previous year, in March 2020, the business secured a £4.25m investment from Comhar Capital to support its ambitious growth plans.

Located on the shore of Bassenthwaite Lake, the business was founded in 2012.