By Joshua Kirby

Davide Campari-Milano NV said Monday that it will acquire a majority stake in U.S. distillery Wilderness Trail with an option to buy the remainder in some years' time, as it looks to make bourbon one of its main offerings.

The Italian drinks group will pay $420 million to buy a 70% stake in Kentucky-based Wilderness Trail Distillery, which makes premium bourbons and rye whiskeys. Campari can then buy the remaining 30% stake from Wilderness Trail's founders via a call/put option exercisable in 2031 for a price determined by the business's earnings.

The transaction should close by the end of the year, pending customary conditions, at which point Wilderness Trail will be integrated into Campari's business, the company said. The purchase will be funded by bank loans as well as existing cash and will therefore increase the group's debt-to-earnings ratio, Campari said.

Wilderness Trail is set to make sales of around $57 million this year, and earnings before interest, taxes, depreciation and amortization of around $37 million, Campari said.

The acquisition adds to Campari's existing bourbon portfolio, including Wild Turkey.

"By adding the fast-growing super premium Wilderness Trail brand, we further expand and premiumize our bourbon offering, priming it to become Campari Group's second major leg after the aperitif portfolio," Chief Executive Bob Kunze-Concewitz said.

Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby

(END) Dow Jones Newswires

October 31, 2022 04:19 ET (08:19 GMT)

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