Eastside Distilling acquires Craft Canning + Bottling for $5.2M
Eastside Distilling announced the acquisition by merger of Portland-based Craft Canning + Bottling, a provider of mobile canning and bottling services in Oregon, Washington and Colorado. Craft Canning + Bottling will combine operations with Eastside's Mother Lode co-packing subsidiary, positioning the combined business unit to be a preeminent local provider to the fast-growing wine and Ready-to-Drink cocktail segments. It is currently expected that the co-packing business will operate under the name Craft Canning + Bottling. The aggregate consideration of $5.2M paid by Eastside to CC+B shareholders in the merger was calculated on a 4.5x multiple of CC+B's 2018 unaudited and estimated adjusted EBITDA of $1.2M. CC+B revenue for 2018, also unaudited, was approximately $6M. Eastside expects the CC+B acquisition to be accretive to Eastside's EBITDA, commencing in the first calendar quarter ending March 31, 2019. The $5.2M consideration paid by Eastside in the acquisition consisted of a combination of $2M in cash, debt of $800,000 in the form of a secured subordinated 3-year Note bearing an interest rate of 5% and 338,212 shares of Common Stock valued at an assumed price of $7.20 per share, or a total value of approximately $2,435,000. Based on the assumed $7.20 price, the transaction has a value of $4,845,000 based on the closing price of Eastside shares of $6.15 on Friday, January 11th. Debt assumed by Eastside in the transaction was insignificant on a net of cash basis. Eastside shares issued in the transaction are subject to a one year "holdback" agreement. Consideration paid by Eastside is subject to downward, but not upward adjustment, based on the completion of the 2018 audit as well as if CC+B fails to earn minimum EBITDA of $1M for calendar 2019. The merger agreement contained customary representations and warranties. Eastside's firm of independent accountants, M & K, has been engaged to perform the SEC required audits.