Australian distiller Lark is fast-tracking international growth plans by acquiring the iconic Tasmanian whisky brand Shene Distillery in a $40 million deal.
The ASX-listed Lark announced on Monday it had entered into a binding agreement for the acquisition of Kernke Family Shene Estate and its second business Pontville Distillery and Estate.
Also included in the deal is an agreement to construct a new distillery with a capacity of 1 million litres and to accelerate Lark’s export strategy.
Geoff Bainbridge, managing director of Lark Distilling Co, tells SmartCompany the acquisition will significantly top up Lark’s inventory, allowing the company to bring forward its export plans.
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“We have momentum but what we didn’t have was enough inventory to pursue an export strategy,” Bainbridge says.
Lark had been engaging with Shene for some time, purchasing its single malt whisky when its own supplies fell short.
In fact, earlier this year Lark bought 30,000 litres of Shene’s single malt whisky to address some flat spots in the ageing maturation profile of its own stock.
“We’ve done our QCs, we’ve done our testing, we’ve worked with their staff, so then it became very natural for us to talk to the vendor,” Bainbridge says.
“[The acquisition] gives us the ability to put a greenfield distillery in and replace their current one on scale.”
Bainbridge says Lark refers to itself as the ‘Penfolds of Australian whisky’ and aims to follow in the footsteps of great Australian wine exporters when planning its entries into other markets.
“Australian wine has done a tremendous job throughout Asia, particularly China, as well as the US and the UK,” Bainbridge says.
Shene’s estate and distillery are located north of Hobart and include 40 acres of land and buildings, a 130,000 litre distillery, a cellar door and historic stables and a homestead.
The acquisition will make Pontville Lark’s third distillery in Tasmania, alongside its Bothwell and Cambridge sites.
Distilling at the new site, which will be led by Lark’s chief distiller Chris Thomson, is slated to begin in February next year when the cellar door opens to customers.
The total consideration for the acquisition is $40 million, including $38 million in cash and $1.5 million in Lark shares that will be issued to the vendors.
To fund the acquisition, Lark is carrying out an equity raising of about $53 million.