Good Drinks' Acquisition Of Stomping Ground Called Off

February 10, 2023, by James Smith

Good Drinks' Acquisition Of Stomping Ground Called Off

In a surprise announcement, Good Drinks and Stomping Ground have said they won't be going ahead with the proposed acquisition announced last year.

In a statement to media, the WA-based operation said: "Good Drinks Australia and Stomping Ground Brewing Co have jointly decided to not proceed with the planned acquisition of the Victorian brewery as announced 22 August 2022.

"Since the intention to purchase Stomping Ground was announced in August, conditions have changed and as a result, both parties have agreed it is best to move forward separately."

Last year, Good Drinks was set to buy 100 percent of Stomping Ground, including its venues, as well as The Local Taphouse in St Kilda. The proposed deal would see them pay Stomping Ground's founders $7m in cash plus 4.5 million in GDA ordinary shares; a trailing five-year performance component could have netted Stomping Ground's founders an additional 3.5 million ordinary shares, up to $8m in cash based upon volume sales, and further payments based on venue performance.

However, in today's statement, Good Drinks managing director John Hoedemaker said: “Stomping Ground is a great business and their management team have done an excellent job of creating a relevant Victorian beer business and brand. Unfortunately, recent conditions have challenged GDA’s underlying business case for the acquisition and would require more resources than initially anticipated to create meaningful value for GDA shareholders.

“We know Stomping Ground will continue to be a great craft beer brand and wish the team all the best for the future.”

Stomping Ground founder Steve Jeffares said: “With softer trading conditions in the last few months, the benefits of joining forces unfortunately became less compelling. We felt it was a smarter option for us both to focus our efforts and resources on consolidating in the markets we know and understand best, our own.

“We’re incredibly proud of our award-winning team, beers, brand and venues, and, along with our committed shareholders, remain excited and energised about our strategic plans for Stomping Ground in Victoria. We wish the Good Drinks team all the best in the years ahead.”

Independent breweries are currently facing a raft of challenges including COVID's continued impact on hospitality, staffing shortages and the rising cost of producing beer. You can read our story about the "perfect storm" hitting the industry as interest rates continue to rise here

Earlier this week, Good Drinks posted their results for the first half of this financial year to the ASX. In the update, the company announced it had recorded an 80 per cent uplift in profit and doubled its retail market share.

You can read Will Ziebell's follow-up interview with Stomping Ground co-founder Steve Jeffares here.

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