Gage Roads buys Matso's for $16m

Gage Roads Brewing Company has struck a deal to purchase Matso's Broome Brewery for $16.1 million, along with a $12 million capital raising to fund the acquisition.

Broome-based Matso’s, which was owned by Kim and Martin Peirson-Jones, has outsourced its beer production to Gage Roads’ Palmyra plant since 2007.

The company specialises in flavoured beers, with its ginger beer holding the largest market share within the Australian ginger beer sector.

The Matso’s brands currently generate about $2.5 million in underlying earnings (before interest, taxes, depreciation and amortisation) per annum, which means the acquisition price represents an earnings multiple of about seven.

The purchase price comprises $13.1 million in cash and an additional $2.8 million in cash or shares, subject to Matso's achieving performance criteria over the next three years.

As part of the acquisition, Gage Roads retains a three-year option to acquire the brewery venue in Broome.

Gage Roads managing director John Hoedemaker said the purchase was in line with the company’s brand strategy.

“We have a long-standing relationship with the Peirson-Jones family having provided brewing and packaging services for Matso’s since 2007,” he said

“We’re therefore delighted to reach an agreement that will see Matso’s join the Gage Roads family”.

“We’re looking forward to adding Matso’s to our portfolio and broadening our offering of high quality brands to our customers.

“The Peirson-Jones family has achieved terrific results with Matso’s, including having created Australia’s market-leading ginger beer.

“We now have an exciting opportunity to position the brand for further growth through our national sales team.”

Gage Roads has also launched a $10 million institutional placement today, along with a share purchase plan to raise up to $2 million.

The company will issue shares at 8.5 cents each, with Argonaut Securities acting as lead manager and sole book runner.

Argonaut also acted as Gage Roads’ corporate adviser for the acquisition.

The balance of the transaction will be funded via existing cash facilities.

Shares in Gage Roads last changed hands at 9.1 cents each.