Chapel Down considers sale as it weighs funding options
By Michele Maatouk
Date: Tuesday 25 Jun 2024
(Sharecast News) - Chapel Down said on Tuesday that it is conducting a strategic review of options to fund long-term growth, which includes investment from existing and new shareholders and a potential sale of the company.
The winemaker noted that its growth strategy includes investing in new vineyards, a new purpose-built winery to be operational for the 2026 harvest and the development of its brand home at Tenterden.
"Considering the timeline of these investments, the board believes that it is now appropriate to review the full range of long-term funding options that support this plan," it said.
Chapel Down said it remains on track to deliver double-digit sales growth in 2024 and retains a strong balance sheet with "significant" headroom to its existing debt facility of £12m. It has also reached agreement in principle to extend and increase this facility.
The company said there can be no certainty a transaction will be pursued, nor as to the terms of any eventual transaction.
Russ Mould, investment director at AJ Bell, said: "Fancy owning an English wine maker? Now's your chance as Chapel Down has effectively put itself up for sale. Coming so soon after moving from the Aquis stock exchange to AIM, one might think something negative is afoot. Yet it makes sense to have raised the company's profile by switching exchanges ahead of putting the 'for sale' flag up.
"Chapel Down has made a name for itself over the years but the business appears to have a hit the ceiling in terms of scale. To grow even more, it really needs a big slug of cash to invest in the business and that might be better coming from a new, bigger owner, rather than going cap in hand to shareholders on an ad hoc basis.
"Plenty of big drinks companies would be in the market for a niche player like Chapel Down as it could add something new for them to get their teeth into, and also as a way of cross-selling products."
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