Republic National Distributing to Merge with Breakthru Beverage

Consolidation in the middle tier underway once again.

In a move that would create a $12 billion beverage alcohol wholesale giant, Republic National Distributing Company (RNDC) today announced plans to merge with Breakthru Beverage.

The two companies have signed a letter of intent to combine assets and operations, according to a press release.

Specific financial terms of the transaction, which is subject to regulatory approvals, were not disclosed. The two companies expect the deal to close in the second quarter of 2018.

The proposed tie-up of the country’s second and third largest multi-state distributors comes about two years after Breakthru was formed, via the 2015 merger of Chicago-based Wirtz Beverage Group and New York’s Charmer Sunbelt Group. At the time of that merger, the Breakthru distribution enterprise employed more than 7,000 associates across 16 U.S. markets and Canada and had more than $6 billion in annual sales.

RNDC, which primarily distributes wine and spirits products, has locations in 22 states and employs more than 9,500.

In the press release, RNDC president CEO Tom Cole called the alcohol distribution landscape “highly competitive” and said the combination of the two companies would “create strategic opportunities” for employees and business partners.

“Much more than a growth opportunity, we are entering this venture to create something that is different, sustainable and transformative,” Cole said via the release. “Together, our deep bench of focused, diverse associates will bring great and unique advantages to our suppliers, our customers and the consumers who enjoy the products we represent.”

Under the terms of the LOI, Cole will serve as CEO, while Breakthru’s Danny Wirtz will serve as chief growth and strategy officer. Breakthru CEO Greg Baird will act as “chief integration officer,” the release also noted.

“Breakthru looks forward to joining forces with RNDC to establish an even stronger foundation of industry knowledge, talent, history and heritage,” Baird said via the release. “We see this as the launch pad to bring innovation to life and to usher in a new era for our business and industry.”

The two companies both currently operate distributors in Alabama, Arizona, Colorado, Florida, Maryland, South Carolina, Virginia and Washington, D.C.

The proposed RNDC and Breakthru tie-up also comes about 16 months after Southern Wine & Spirits completed its own merger with Glazer’s Inc. Now known as Southern Glazer’s Wine & Spirits, that group is the largest North American wine and spirits distribution company, delivering more than 150 million cases in 44 U.S. states annually.

A press release with additional information is included below.

Republic National Distributing Company and Breakthru Beverage Group to Form $12 Billion Company with North American Footprint

NEW ORLEANS and NEW YORK (Nov. 20, 2017) — Republic National Distributing Company, LLC (“RNDC”), a distributor and broker of premium wine and spirits, and Breakthru Beverage Group, LLC (“BBG”), a distributor and broker of beer, wine and spirits in the U.S. and Canada—both members of the Forbes list of “America’s Largest Private Companies”—today announced the execution of a Letter of Intent to combine their assets and operations.

“The merger of RNDC and Breakthru will create strategic opportunities that will benefit our associates and our business partners in a rapidly changing and highly competitive marketplace. Much more than a growth opportunity, we are entering this venture to create something that is different, sustainable and transformative,” said RNDC President & CEO Tom Cole. “Together, our deep bench of focused, diverse associates will bring great and unique advantages to our suppliers, our customers and the consumers who enjoy the products we represent.”

Breakthru Beverage Group President & CEO Greg Baird commented, “Breakthru looks forward to joining forces with RNDC to establish an even stronger foundation of industry knowledge, talent, history and heritage. We see this as the launch pad to bring innovation to life and to usher in a new era for our business and industry.”

“Across North America, the combined company of RNDC and Breakthru will benefit from a broadly expanded footprint, a passionate and creative team, and an uncompromising commitment to providing innovation, value and service to all our stakeholders,” added Cole.

Strategic Rationale: The Game Has Changed

Beverage alcohol industry trends and the greater consumer and retail environment show that there are compelling reasons for RNDC and BBG to expand their footprints and to become more responsive to the marketplace by recognizing the best practices and efficiencies of each business. Continuous innovation and agility are keys to wholesaler success as retail customers grow, and beverage alcohol suppliers seek to be increasingly nimble, efficient and responsive to evolving consumer demands.

Even beyond the beverage alcohol industry, the retail marketplace is changing quickly and significantly. The merger of RNDC and BBG will also facilitate investments in technology that will enhance all aspects of their business, from supply chain management, customer and supplier connectivity, e-commerce, predictive analytics, digital marketing, data transparency, consumer experience and operational efficiency.

Strengthened by their diverse experience and perspectives, best-in-class talent, and an unwavering commitment to innovation, the combination of RNDC and BBG will address key areas to provide a more agile service model for customers and suppliers across the United States and Canada.

Management and Operations

Under the terms of the Letter of Intent, Tom Cole will serve as Chief Executive Officer; Bob Hendrickson as Chief Operating Officer; Danny Wirtz as Chief Growth and Strategy Officer; and Greg Baird as Chief Integration Officer. E. Lloyd Sobel’s role will be announced along with other key senior management appointments prior to the close of the transaction.

Timeframe to Completion

The transaction is expected to close late in the second calendar quarter of 2018 subject to regulatory approvals and other customary closing conditions.

About Republic National Distributing Company

RNDC is a distributor of premium wine and spirits 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 9,500 associates nationwide. For more information, 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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