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UPDATED: Huge B.C. wine news — Peller family to purchase Black Hills Winery, Tinhorn Creek and Gray Monk

September 11, 20172

B.C. wine

Andrew Peller Limited announced today that it has signed definitive agreements to acquire 100% of Black Hills Estate Winery and Gray Monk Estate Winery and has entered into a letter of intent to acquire 100% of Tinhorn Creek Vineyards, for a combined purchase price of $95 million.

The three estate VQA wineries in British Columbia’s Okanagan Valley generated total revenues of approximately $25 million in their latest fiscal years. The purchase will be funded by a combination of $78 million in cash from the Company’s credit lines and $17 million worth of Class A common shares. The company expects to close all of the transactions on or before the end of October 2017.

“My grandfather started our business in the Okanagan nearly 60 years ago, and we have always been inspired by the Valley’s promise to make wines that rival the very best in the world.  We have long admired these leading estate VQA wineries and now it is a privilege to bring their ultra-premium wines and talented people into our family,” said John Peller, Andrew Peller Limited’s Chief Executive Officer. “With our investment and resources, these wines have the potential to grow, develop and compete in the growing luxury wine market around the world.”

Black Hills Estate Winery, located on the Black Sage Bench near Oliver, B.C., is one of Canada’s most prestigious wine producers with an award-winning portfolio of premium and ultra-premium wines, including its flagship Nota Bene, the number one ultra-premium red wine in Canada. Recognized for its terroir and 50 acres of vineyards, the winery consistently sells out of its high performing portfolio of VQA wines.

“Black Hills has been proud of how we have evolved our quality over the years. This new partnership allows us access to resources and tools to evolve even further,” said Glenn Fawcett, President, Black Hills Estate Winery.

Gray Monk Estate Winery, founded in 1972, is a family-owned and operated winery located in Okanagan Centre in the Lake Country region north of Kelowna, B.C. With a beautiful estate winery and 50 acres of grape plantings, Gray Monk is a favorite destination for wine lovers visiting the Okanagan Valley to enjoy BC’s best-selling Pinot Gris as well as other popular red and white wines.

“We’ve known the Peller family for many years and share and appreciate the same values and approach to quality winemaking. We are delighted to partner with them to continue the legacy of Gray Monk Estate Winery in the Okanagan,” said George Heiss, co-owner, Gray Monk Estate Winery.

Tinhorn Creek Vineyards, located on the Golden Mile Bench, the Okanagan’s only sub appellation, near Oliver, B.C., sits among 150 acres of vineyards and the winery’s prestigious and award-winning Miradoro Restaurant. Family-owned and operated since 1993, Tinhorn Creek produces both red and white wines in the ultra-premium category sold through their loyal wine club, numerous on-site events, restaurants and fine wine retailers.

“It has been the honour of my life to have helped build Tinhorn Creek, to make great wines with an attention to sustainability and most importantly, to run our business with empathy toward our employees, our customers and our community,” said Sandra Oldfield, CEO, Tinhorn Creek Vineyards.  “Andrew Peller will continue the long term development and growth in the Okanagan that we started.”

According to Randy Powell, the Company’s President, there is a significant opportunity for growth in the Okanagan wine region.  “Canadian consumers are becoming more and more interested in super and ultra-premium wines, and these are some of the greatest brands in the country,” Powell stated. “They complement our Western Canada VQA portfolio well and will significantly strengthen our presence in the region.”

Completion of the each transaction is subject to a number of conditions customary for transactions of this nature and, in the case of Tinhorn Creek Vineyards, entering into a definitive agreement.  In addition, the issuance by the Company of Class A common shares in connection with the transactions will be subject to the approval of the Toronto Stock Exchange.  Each transaction is independent of, and not conditional upon, the other transactions.

Statement from Black Hills

I wanted to share with you the exciting news that Black Hills Estate Winery, known for its ultra-premium, award-winning portfolio of Okanagan wines, has been acquired by Andrew Peller Limited. The sale has been approved by the Black Hills Estate Winery board of directors and is subject to approval by its limited partnership. The transaction is expected to be completed in early October.
Since our humble beginnings in our Quonset Hut on Black Sage Road back in 1996, our winery has been committed to continuously pushing the quality of the grapes we grow, the wine we produce and the hospitality we provide. We call this our “continual quality evolution” and we have put painstaking efforts and significant capital investments into this commitment over the years.
We are thrilled that Andrew Peller Limited, a three-generation winery, shares this same passionate vision for our wine and will in turn give our winery access to the resources and tools to evolve our wine even further. With their resources and support they provide us with an opportunity we could only dream about before, and that is to compete on the global stage.
It is expected that most, if not all, of the employees currently with our business will continue with the winery under the new ownership, including myself and winemaker, Graham Pierce. We will continue to maintain all relationships with our loyal customer base and honour all commitments and privileges for all Wine Club members. Further, together with Andrew Peller Limited we will continue to support the important restaurants and fine wine stores that we have worked with for years.

What does this mean?

With the purchase of three ultra-premium B.C. VQA wineries Peller has clearly announced that it is in full acquisition mode and has Arterra Wines Canada clearly in its sights for largest wine company in Canada.
While Arterra — formerly part of the U.S. wine giant Constellation Brands but bought by the Ontario Teachers Pension Plan this year — is still untangling itself from Constellation, Peller has made a strategic sweep through the Okanagan to lock up three key Okanagan wineries. They did this quickly after building and opening the Wayne Gretzky Estate Winery and Distillery in Niagara — a key plank in the Peller family of wineries.
Arterra’s CEO Jay Wright told me in an interview not long ago that the new Canadian company will take a cautious approach to acquisitions in the short term. But that just may change in light of today’s news. What we could see here is the two largest wine companies in Canada going toe to toe to buy up what they can to forge their place in the Canadian winescape.
There are no shortages of Canadian wineries for sale, and clearly there is a need to grow the business for both Peller and Arterra.
In this race to be first, Peller is out of the gate first. Your move Arterra.