Proposed RNDC, Breakthru Beverage Merger Terminated Following ‘Protracted’ FTC Review

A blockbuster merger between two alcohol-distributing giants that was 16 months in the making has been terminated.

Republic National Distributing Company (RNDC) and Breakthru Beverage Group — the second and third largest wine and spirits wholesalers in the U.S. – today announced the cancellation of an intended merger first announced in 2017 to create a multi-state wholesale operation.

In a press release, the two companies said a prolonged Federal Trade Commission (FTC) review of the merger led to the decision to back away from the deal.

“Drawing strength from RNDC’s robust market position and positive outlook, we intend to continue on our path toward achieving enhanced efficiencies and innovation while carefully evaluating other strategic options,” Tom Cole, CEO of RNDC, said via a press release.

First announced in November 2017, the tie-up would have created a $12 billion operation spanning 30 states. It was intended to compete with Southern Glazer’s, itself a combined entity (Southern Wine & Spirits and Glazer’s Inc.) that delivers more than 150 million cases of product across 45 U.S. states.

Commenting on behalf of Breakthru Beverage, which was formed in 2015 via the merger of Wirtz Beverage Group and Charmer Sunbelt Group, CEO Greg Baird said the company would continue to look for future growth opportunities.

“We’ve continued to advance the Breakthru business and our innovation platform and operating model are well positioned for growth,” he said in the release. “We are confident that the strengths and stability of Breakthru, combined with the expertise of our team, uniquely positions us to serve our partners, both now and in the future.”

The merger was supposed to be finalized in the second quarter of 2018, however, FTC attorneys reportedly expressed antitrust concerns during their review.

According to The Capitol Forum, a subscription-based regulatory analysis service covering antitrust and global mergers and acquisitions, FTC attorneys had requested information from national suppliers with a presence in the Southeast and Mid-Atlantic last August.

Small manufacturers who spoke to the Capitol Forum articulated fears about not being able to access mainstream retail channels as a result of the middle tier merger.

Meanwhile, retailers said the merger would create less competition and reduce leverage when negotiating which alcohol brands they would purchase since there would be one fewer distributor option to choose from in many regions of the U.S.

A press release with additional information is included below.

Republic National Distributing Company and Breakthru Beverage Group Terminate Proposed Merger

Grand Prairie, Texas — April 5, 2019 — Republic National Distributing Company and Breakthru Beverage Group today jointly announced that the proposed business combination of the two companies has been terminated and the related Hart-Scott-Rodino filing with the United States Federal Trade Commission (FTC) has been withdrawn. While both companies were optimistic about the prospects of the combined company, the decision to terminate the proposed merger was made after a protracted review by the FTC.

“Drawing strength from RNDC’s robust market position and positive outlook, we intend to continue on our path toward achieving enhanced efficiencies and innovation while carefully evaluating other strategic options,” stated Tom Cole, Chief Executive Officer of RNDC. “We look forward to further strengthening our relationships with our suppliers and customers and serving the many consumers throughout the U.S. who enjoy premium wine and spirits.”

“We’ve continued to advance the Breakthru business and our innovation platform and operating model are well positioned for growth,” said Greg Baird, Breakthru Beverage CEO. “We are confident that the strengths and stability of Breakthru, combined with the expertise of our team, uniquely positions us to serve our partners, both now and in the future.”

About Republic National Distributing Company

RNDC is the second largest distributor of premium wine and spirits in the United States with operations in Alabama, Arizona, Colorado, District of Columbia, Florida, Indiana, Kentucky, Louisiana, Maryland, Michigan, Mississippi, Nebraska, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Texas, Virginia and West Virginia. RNDC employs more than 9500 individuals nationwide. For more information about the company, please visit www.rndc-usa.com.

About Breakthru Beverage Group

Breakthru Beverage Group is a leading North American beverage wholesaler driving innovation in the marketplace with a nimble and insightful approach to business. Breakthru was formed in 2016 through the merger of two highly-regarded family-owned industry wholesalers—Charmer Sunbelt Group and Wirtz Beverage Group. Breakthru employs more than 7,000 associates representing a portfolio of premier wine, spirit and beer brands in the United States and Canada. For more information, visit www.BreakthruBev.com.

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