WineDepot will acquire digital B2B alcoholic beverage company Kaddy, merging the two into Australia’s largest alcohol-focused cloud-based logistics and marketplace platform.
WineDepot’s parent company is Digital Wine Ventures, listed on ASX (ASX code: DW8). DW8 has raised $ 12.75 million through a placement with institutional and sophisticated investors and announced that its 10,000+ existing retail investors will be invited to participate in the capital increase through a purchase plan shares (SPP) of $ 2 million under the same conditions.
Other investors include the founders of Four Pillars Distillery and the founder and restaurant entrepreneur of Urban Purveyor Group, John Szangolies. Szangolies was an investor in Kaddy’s $ 3.5 million fundraiser in June 2020, which improved its platform capabilities, hiring and interstate expansion.
Subject to DW8 shareholder approval, Kaddy shareholders will receive total consideration of $ 6.75 million in cash and $ 484.9 million in shares. Approximately $ 5.3 million of the funds raised will be used to accelerate the expansion of Kaddy’s B2B market.
As it stands, the combined annualized revenue rate before the merger is approximately $ 21 million and the estimated annualized gross market value of market activity is $ 18 million.
WineDepot CEO and Founder Dean Taylor said the merger of the two “would dramatically accelerate” WineDepot’s growth trajectory.
Taylor said, “Our vision to bring digital transformation to the alcoholic beverage market has always been founded on our ability to create an integrated technology platform that the industry can use to connect, simplify, deliver and share value. released. A platform that integrates the next generation B2B marketplace supported by a logistics, order management and payment solution, enabling our ecosystem of suppliers to serve their own customers.
Kaddy co-founder Mike Abbott will join the DW8 board of directors and lead the platforms division of the combined WineDepot / Kaddy business. Kaddy’s other co-founder, Rich Coombes, will join sales management. Taylor will remain CEO of the merged entity.
Abbott and Coombes bring high caliber experience to the new merged entity. Friends since high school, Coombes co-founded Batlow Cider and Capital Brewing, while Abbott was previously the co-founder of Uber in Australia.
“This merger represents a quantum leap in realizing our vision and the ability to scale rapidly, both here in Australia and in overseas markets. We are delighted to join forces with Mike, Rich and the rest of the Kaddy team. We have seen the Kaddy team grow over the past two and a half years and it has become evident that they have built a market leading B2B beverage market that has been adopted by the industry, ”Taylor said.
Kaddy and WineDepot both launched in 2019, becoming increasingly prominent in their respective markets. As WineDepot developed an integrated technology platform for commerce, logistics and payment management, operating for the wine industry, Kaddy was following a similar trajectory for the craft beer, spirits, cider and seltzer sectors. .
Together, the combined operation will have more than 1,900 buyers in the on-site and off-site segments, as well as approximately 1,000 alcoholic beverage suppliers representing more than 10,000 products.
Abbott said, “Our entire team is motivated to join forces with WineDepot. For our existing customers, this will allow them to immediately enjoy even greater value through a wider range of products on the same order, invoice and delivery, and this is just the start of what promises to be. a real revolution in the wholesale beverage industry. “
Taylor said the main benefits for buyers would be greater choice through a much wider range of products and suppliers, lower costs, improved convenience and a superior fulfillment experience through the integration of the two companies. .
“The depth, variety and diversity of our combined product line will be impressive, with a strong differentiating focus on craft, independent, boutique and emerging brands that are not currently available through mainstream distribution.
“For suppliers, we will provide access to more qualified buyers, lower customer acquisition costs, seamless entry into new markets and simplified back-office functions, including invoicing and guaranteed payments.
“The technology deployed by each company can be easily and quickly integrated to unlock synergies that benefit suppliers, retailers and distributors alike, a process that we believe will begin to generate value in a matter of months,” said Taylor said.
DW8 will seek shareholder approval to change the name of the holding company at the next annual general meeting to reflect the fact that its total addressable market now goes far beyond wine.