Splash Beverage set to acquire Western Son Vodka

FORT LAUDERDALE, FL - Splash Beverage Group, Inc. (NYSE American: SBEV), a company specializing in the marketing and distribution of various beverage brands, has signed an updated Letter of Intent (LOI) to acquire craft spirits brand Western Son Vodka through a stock-for-equity transaction, with the goal of significantly expanding its financial footprint beyond its current $14.47 million market capitalization and $6.26 million in trailing twelve-month revenue. According to InvestingPro data, SBEV has shown strong momentum with a 20% return over the past week. The merger, which is still subject to definitive agreements, regulatory approval, and shareholder consent, is expected to double Splash’s trailing twelve-month revenue.

Under the proposed terms, Western Son shareholders will receive restricted shares in Splash Beverage Group and about 10% in cash consideration. Splash will also take on certain outstanding debts of Western Son. This revised acquisition structure, which moves away from the initially proposed cash-centric deal, aims to align the interests of both entities and provide a clearer path to completion. InvestingPro analysis indicates that SBEV currently operates with a significant debt burden, with a concerning current ratio of 0.17.

Western Son Vodka, founded in 2011 and headquartered in Pilot Point, Texas, has been recognized for its award-winning craft vodka distilled ten times from 100% American corn. The brand recently won the 2024 Newsweek Readers Choice Award for Best Vodka.

Robert Nistico, CEO of Splash, expressed enthusiasm for the acquisition, stating that integrating Western Son into their portfolio has been a persistent goal due to the brand’s potential to enhance revenue and operational efficiencies. He also anticipates that the merger will accelerate Splash’s path to profitability and will be accretive to shareholders. This focus on profitability comes at a crucial time, as InvestingPro reports show the company experiencing a significant revenue decline of 70% in the last twelve months. InvestingPro subscribers have access to 13 additional key insights about SBEV’s financial health and growth prospects.

Carlos Guillem, President of Western Son, indicated that the new LOI is a significant milestone for the company, bolstering its foundation for growth and market presence. He is optimistic about the partnership’s ability to innovate and strengthen Western Son Vodka’s position in the market.

The companies aim to finalize the transaction within this quarter. Splash Beverage Group’s strategy involves developing early-stage brands in its portfolio and acquiring innovative brands to accelerate their growth. The management team of Splash has a history of building and managing top beverage industry brands.

This news is based on a press release statement and the companies have committed to providing further updates as they reach key milestones in the acquisition process. For comprehensive analysis and detailed metrics on SBEV and over 1,400 other US stocks, investors can access the full Pro Research Report available exclusively on InvestingPro.

In other recent news, Splash Beverage Group has been the focus of substantial developments. The company reported a 70% year-over-year revenue decline in its third-quarter results for 2024, attributed to the reallocation of funds from its e-commerce business to support the beverage portfolio. However, Splash Beverage Group has started redirecting investments into the e-commerce platform, expected to improve revenue in the fourth quarter of 2024 and into 2025.

The company is actively pursuing mergers and acquisitions (M&A), including the acquisition of Western Son Vodka and a letter of intent to purchase an energy drink company. These M&A efforts are anticipated to significantly alter the company’s financial landscape and create operational savings across its brand portfolio.

Splash Beverage Group has also reported its second-quarter 2024 results, with a revenue of $1.0 million, falling short of the estimated $1.6 million due to capital constraints. Nevertheless, the company has received an initial $4.0 million from a funding agreement, with an additional $3.0 million expected soon.

H.C. Wainwright has maintained a Buy rating on the company, despite lowering the price target to $0.50 from the previous $1.00. This adjustment follows the company’s recent financial performance, and the firm’s revised revenue forecasts for 2024 and 2025.

Furthermore, the company’s stockholders have elected five individuals to the board of directors and approved two separate proposals regarding the issuance of common stock. These developments are part of the company’s recent efforts to enhance its business stability and financial performance.

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