Nyetimber bids to acquire the Lakes Distillery for £71m

Sparkling wine producer Nyetimber has proposed a £71m deal to takeover Cumbria-based whisky and gin maker, the Lakes Distillery.

The offer, supported by Lakes’ board, values the company’s share capital at approximately £46.1m.

As Lakes has significantly expanded capacity over the last few years, Sussex-based Nyetimber said it believed there was a "sizeable opportunity" for the business to grow its share of the UK single malt whisky market and internationally.

Nyetimber said it could support Lakes’ ambition to become a leading international spirits brand. The deal marks the next step in the winemaker’s plan to create a globally relevant, English luxury drinks group.

The wine supplier has no plans to close or relocate Lakes’ headquarters or its distillery from its current Cockermouth location, or to redeploy any of the firm’s fixed assets.

However, it will review the size and location of Lakes’ administrative, headquarters and support functions, with a particular focus on those currently located in Lakes’ Newcastle office. Nyetimber said this may result in the relocation of relevant staff and/or headcount reductions affecting up to 25 employees.

The Lakes’ chief executive James Pennefather said the company had a 10-year plan to achieve a 1% share of the global luxury dark spirits market by 2030, which would require £10m additional funding over the next three years to increase production capacity and stock.

Nyetimber intends to boost the Cockermouth distillery’s capacity to at least 500,000 litres per annum. This may result in closing or relocating the on-site bar and restaurant, which would affect up to 12 employees.

Pennefather said: “Joining the Nyetimber family of companies offers the prospect of an owner with the same shared strategic vision and crucially, certainty of funding. The Lakes will benefit, in particular in terms of quality of production, brand marketing and routes to market.”

Nyetimber’s counterpart, Eric Heerema, believes that the potential acquisition could drive new growth as well as supporting Lakes’ ambitions.

“Not only do we have an inherent understanding and strong relationships with the world’s leading luxury restaurants, bars and retailers, but we also have a shared strategic vision,” he said.

Lakes has remained lossmaking in recent financial years as its management has invested heavily in brand development, single malt production levels and laying down stock. During the financial year ended 30 June 2023, Lakes reported an audited EBITDA loss of £1.3m on net revenue of £5.8m.

Trading in the current financial year has so far been consistent with the Lakes board’s internal plan, with unaudited management accounts showing year-on-year net revenue growth of 35% during the seven months ended 31 January 2024.

The acquisition is expected to be finalised by the end of Q2 2024, subject to the necessary approvals.