Digital Wine Ventures gains Parton takeover deal


Deal to give DWV assets including 30-vehicle fleet and 23,000 sq m of warehousing

Digital Wine Ventures gains Parton takeover deal
Part of the Parton fleet

 

Third-party logistics firm Parton Wine Group (PWG) has agreed to a takeover offer from Digital Wine Ventures (DW8).

Listed DWL, which focuses on technology-driven businesses servicing the global wine and beverage industry and controls sector digital service WineDepot, will gain a 14-year-old third-party logistics provider with 23,000 square metres of warehouse space and its own fleet of 30 medium and light trucks and vans.

DWL said it has received share placement commitments of $7.5 million "to fund the acquisition and support growth strategy".

That spending is to include:

  • $2.8 million to clear Parton’s existing liabilities
  • $1.2 million to repay Parton’s debtor finance
  • $1 million to fund Parton’s planned capital expenditure projects
  • $2.5 million to fund expansion of the merged logistics business.

The consideration for the acquisition is "entirely performance based via an earn-out through the issues of performance securities, vesting in two tranches" upon the achievement of two ‘milestones’.

These would be $15 million in minimum annual revenue and $350,000 in minimum annual earnings before interest, tax, depreciation and amortisation (EBITDA) each in this and next financial year.

PWG is based in Perth and has operations in New South Wales and Victoria and the warehousing will augment WineDepot’s directly controlled 10,000 pallet national distribution centre in Albury/Wodonga, 3,000 pallet depot in Adelaide and a  network of third party warehousing and freight providers that it uses to service Brisbane,  Sydney, Melbourne and Perth. 

As part of the acquisition, PWG founder, Richard Raddon is to join the WineDepot’s senior executive team as general manager of the logistics division, assisting in the post-merger integration of his business.

Raddon has almost four decades of experience within the wine warehousing and logistics sector including 21 years working as a warehouse and distribution manager for Southcorp Wines, now Treasury Wine Estates.

Raddon also worked as a business manager at Toll Logistics, helping them to develop specialist capability within the wine and beverage sector.    

Raddon's son, David, with 25 years of logistics and operational experience, will also join as national operations manager.

"We are really excited to work with Richard and become the custodians of the business that he and his son David have spent many years building," DWV CEO Dean Taylor said.

"Their track records are impressive, and their extensive experience within the wine industry stacked together with almost 100 knowledgeable, experienced and dedicated staff provides a significant boost to our operational capability." 


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Taylor went into some detail on the logic of the acquisition, noting that it would enhance WineDepot’s value proposition and boost the integrated trading, logistics and payment management platform’s service levels, including for logistics.

"Similar to the world’s most successful marketplaces, we believe fast, cost-effective and reliable order fulfilment is the most powerful way to differentiate your customer value proposition and propel sales growth. Investing in this capability is good for both us and our customers," he said.

"The challenge is, that up until now, we have relied heavily on third party warehousing and freight providers to support our national logistics network.

"This model worked reasonably well in serving our customers, but as our business continues to scale, we need more control over how our supply chain is operated. Particularly during peak periods when third-party networks can become slow and congested.

"Having our own dedicated fleet of delivery vans and drivers will ensure we provide an exceptional experience for trade buyers using MARKET, our recently launched direct-to-trade online marketplace.

"Having direct control over our warehouses, with the ability to offer temperature controlled, cold chain and bonded storage will also help us to acquire major accounts which have eluded us to date.

"Importantly, moving to a closed loop network provides the physical foundations required to underpin the other products we offer through our technology platform."

"Along with an immediate lift in key metrics, the acquisition provides us with another 225 customers that can be leveraged to drive further growth across our platform.

"The scale of the merged operation, overlaid with our investment in state-of-the-art technology, will undoubtedly help position WineDepot as the market leading supply chain solution, focused on supporting the e-commerce shift in the wine industry.

"For all of these reasons I am confident that this acquisition will accelerate our market penetration in Australia and generate a lot of additional value for both customers and DW8 shareholders alike."

 

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