Introductory Note
As previously disclosed, on November 16, 2023, The Duckhorn Portfolio, Inc., a Delaware corporation (the “Company”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Company, Auguste Merger Sub, Inc., a California corporation and a wholly-owned subsidiary of the Company (“Merger Sub”), Brown-Forman Corporation, a Delaware Corporation (“Brown-Forman”) and Sonoma-Cutrer Vineyards, Inc., a California corporation and a wholly-owned subsidiary of Brown-Forman (“Sonoma-Cutrer”), pursuant to which on April 30, 2024 (the “Closing Date”), Merger Sub merged with and into Sonoma-Cutrer (the “Merger”) with Sonoma-Cutrer continuing as the surviving entity and wholly owned subsidiary of the Company.
| Item 2.01 | Completion of Acquisition or Disposition of Assets. |
The information set forth in the Introductory Note and under Item 5.01 is incorporated by reference into this Item 2.01.
At the effective time of the Merger (the “Effective Time”), the Company issued and paid, as applicable, 31,531,532 shares of the Company’s common stock (the “Share Consideration”) and $49,614,448, equal to $50,000,000 as adjusted by certain adjustments set forth in the Merger Agreement, including for cash, working capital, indebtedness and transaction expenses (together with the Share Consideration, the “Merger Consideration”).
The foregoing description of the Merger Agreement and the transactions contemplated thereby, does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Merger Agreement. A copy of the Merger Agreement is filed as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated by reference into this Item 2.01.
| Item 2.02 | Results of Operations and Financial Condition. |
On May 1, 2024, the Company issued a press release announcing, among other things, (i) the appointment of Deirdre Mahlan as President and Chief Executive Officer of the Company and (ii) certain preliminary financial results for the third quarter ended April 30, 2024. A copy of the press release is furnished as Exhibit 99.5 to this Current Report on Form 8-K. The preliminary financial information presented in the press release is based on the Company’s current expectations and may be adjusted as a result of, among other things, completion of customary quarter close procedures and financial review.
As provided in General Instruction B.2 of Form 8-K, the information in this Item 2.02, including Exhibit 99.5, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information or Exhibit 99.5 be deemed to be incorporated by reference in any filing under the Securities Act or the Exchange Act, regardless of any general incorporation language in such filing.
| Item 3.02 | Unregistered Sales of Equity Securities. |
The information set forth in the Introductory Note and under Item 2.01 is incorporated herein by reference.
The shares of the Company’s common stock to be issued in connection with the Merger Agreement have not and will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), and have been issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act.
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
President and Chief Executive Officer
On April 29, 2024, the Board of Directors (the “Board”) of the Company appointed Deirdre Mahlan, currently serving as interim President, Chief Executive Officer and chairperson of the Board of the Company, as the non-interim President and Chief Executive Officer of the Company, effective April 30, 2024. Ms. Mahlan will also continue in her role as chairperson of the Board.
In connection with Ms. Mahlan’s appointment as non-interim President and Chief Executive Officer of the Company, the Company, Duckhorn Wine Company, a wholly-owned indirect subsidiary of the Company, and Ms. Mahlan entered into an employment agreement (the “Employment Agreement”), dated April 30, 2024, pursuant to which Ms. Mahlan will be entitled to receive an annual base salary of $700,000 and eligible to receive an annual bonus with a target equal to 100% of her annual base salary. In addition, in connection with Ms. Mahlan’s appointment as non-interim President and Chief Executive Officer of the Company, Ms. Mahlan was granted a number of restricted stock units calculated by dividing $4,500,000 by the closing price of the Company’s common stock on the grant date, with $1,000,000 of such restricted stock units vesting on each of the one-, two- and three-year anniversaries of the grant date, and $1,500,000 of such restricted stock units vesting upon the attainment of the Company’s common stock trading at or above $13.00 for twenty consecutive trading days during the three-year period from the grant date, in each case, pursuant to the Company’s 2021 Equity Incentive Plan and subject to acceleration as provided for under the applicable grant agreement.
