Gage Roads Brewing acquisition of Matso’s values the Broome-based brewery at $13.25-million minimum.

Gage Roads Chief Operating Officer Aaron Heary

Gage Roads announced their intention to acquire 100 per cent of Matso’s shares for $13.25-million cash.

The deal also included additional payments of15,000,000 shares or $1.2-million in years one and two and5,000,000 shares in year three, all based on sales volume targets.

In a presentation to shareholders the publicly-listed brewery said the additional performance-based component aligns the vendor’s interests with those of shareholders.

The performance component values Gage Roads at $0.125 per share, against a current stock market price of $0.93 at time of writing.

The Matso’s brand currently generates in excess of $2.5-million EBITDA per annum. Gage says the acquisition is expected to deliver 20 per cent share price growth based on current Matso’s earnings.

As part of the acquisition, Gage Roads retains the option to acquire the Broome brewery venue for three years.

Matso’s is an established West Australian flavoured beer brand owned by the Peirson-Jones family in Broome. The brand is best known for its popular Ginger and Mango beer varieties. Originating in Western Australia’s pearling town Broome, Matso’s has become the leading nationally distributed alcoholic ginger beer and flavoured beer brand of Australia.

Matso’s took its name from Matso’s General Store, which was run by the Matsumoto family in the 1950s. Today, the former store houses the Matso’s brewery and pub which is a major Broome attraction.

By 2007, national demand for the refreshing Kimberley-inspired beers had grown beyond the original venue’s brewing capacity and almost all of the products have since been produced at Gage Roads’ Palmyra plant with volumes growing to two-million-litres per annum.

Gage Roads Chief Operating Officer Aaron Heary described the purchase as a “really nice fit”.

“When we look at Matso’s, we really understand their products. Our two companies have grown up together, as sort of best friends since we first started growing it in 2007,” he said.

“So it sounds a little bit sort of romantic really but ultimately we understand everything that they’ve been doing from a branding perspective, we understand their sales and route to market; understand their their sales history and the spikes that happen at certain times of year and where it’s all being sold.”

“It was really nice fit.”

Heary said keeping the brand Western Australian was an attraction for the vendors.

“The Peirson-Jones family is a very proud family from Broome. They want to see the Matso’s brand grow and they want to see it to be a really strong part of the West Australian landscape,” he explained.

“They were really keen for it to stay that way and they really liked the fact that we’re an independent West Australian company.”

The Company will undertake a $10-million placement to institutional shareholdersand a $2-million share purchase plan as part funding of the transaction.

In a statement to the ASX the company said the acquisition represents a major expansion of the Gage Roads brand portfolio.

“The additional Matso’s brands at current volumes and strong profit marginsprovide Gage Roads the opportunity to leverage its existing national sales,marketing and distribution capability and deliver sustained earnings growth. Ourhistory and knowledge of the Matso’s brands and existing production capabilityminimises integration and sales risks, allowing the incremental margins to trulyflow through to and complement existing earnings in full.”

“With Gage Roads’ strength of people, sales, marketing and distribution expertisewe anticipate outperforming current volumes and growing the Matso’s brands totheir full national potential.”