Mr. Nicolas Krantz reports

CORBY SPIRIT AND WINE LIMITED TO ACQUIRE ACE BEVERAGE GROUP

Corby Spirit and Wine Ltd. has signed a definitive agreement to acquire 90 per cent of the outstanding shares of Ace Beverage Group Inc. for $148.5-million.

With roots dating back to 2013, Ace Beverage Group has achieved consistent high-double-digit growth to become a Canadian ready-to-drink (RTD) leader. Its flagship brand, Cottage Springs, is the leading ready-to-drink brand in Ontario, with a strong positioning in key category segments and bestsellers that include: Cottage Springs vodka soda, vodka water and tequila soda. Ace also boasts a rich and diversified portfolio of other innovative brands, such as Ace Hill, Cabana Coast and Liberty Village.

The transaction adds significant scale to Corby's portfolio in the high-growth RTD category. Additionally, the Ace team brings to Corby a deeper understanding of the category and its consumers, along with agile innovation capabilities and execution excellence.

Compelling strategic and financial benefits:

• Expansion into the large, fast-growing and highly attractive RTD segment, where RTDs have significantly outperformed other categories in the beverage alcohol market and continue to exhibit a vast runway for future growth;
• Adds Cottage Springs, the No. 1 RTD brand in the Liquor Control Board of Ontario (LCBO), along with other industry-leading brands Ace Hill, Cabana Coast and Liberty Village to Corby's dynamic product portfolio;
• Combines two companies with proven records of building brands, successful product development, innovation capabilities and ability to launch new on-trend products for consumers;
• Creates value for Corby shareholders: The transaction is expected to be highly accretive, adding an asset-light, low-capital-expenditure business to Corby, enabling Corby to enhance its growth profile, and maintain strong margin, low leverage and return capital to shareholders.

"Corby's sustained growth relies on our ability to bring exciting choices to our consumers by continually expanding into new and promising categories. We are extremely excited to partner with Ace and become one of the leading RTD players in Canada as we believe the combined strength of our companies and people will unlock new opportunities," said Nicolas Krantz, Corby's president and chief executive officer. "The Ace team has built an inspiring business through a culture of execution excellence, consumer centricity and passionate people. We look forward to welcoming them to Corby and are excited about the benefits this acquisition will create for our consumers, customers and shareholders."

Ace Beverage Group's co-founder, Cam McDonald, added: "We are thrilled to join Corby, and are extremely proud of Ace's journey and accomplishments to date. As we begin this next chapter, we believe the significant joined expertise, experience and resources will help our businesses to take the next step in our shared ambition of continuing to develop industry-leading beverages for consumers."

Transaction details

Under the terms of the agreement, Corby will initially acquire 90 per cent of the outstanding share capital and voting rights of Ace for $148.5-million (at an overall enterprise value of $165.0-million), with the remaining 10 per cent mainly held by certain Ace founders. Corby has a path to 100-per-cent ownership of Ace through a series of two call options on the remaining shares, exercisable in 2025 and 2028. The transaction was approved by Corby's board of directors after receiving a fairness opinion from National Bank Financial Inc. and will be financed using available cash and financing in the amount of $120.0-million from Corby's majority shareholder, Pernod Ricard. The financing is on arm's-length terms at market rates and, as a related-party transaction, was approved by Corby's independent directors, with external financial and legal advice. Pro forma, the transaction is expected to increase Corby's operating revenue by approximately 35 per cent and to be accretive on Corby's operating margin. Upon closing, pro forma net debt/adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) (for the last 12 months) is expected to be 1.8 times. The transaction is expected to close in the first quarter of Corby's fiscal year 2024.

Conference call

Corby will host a conference call on Tuesday, June 13, 2023, at 9 a.m. EST, to discuss the transaction. You may participate in the conference call by webcast. You can also dial 416-764-8659 or toll-free 1-888-664-6392 before the start of the call. A playback of the conference call will be available for 30 days by calling 416-764-8677 or 1-888-390-0541 and entering passcode 950172 followed by the number sign.

Advisers

National Bank Financial Inc. acted as financial adviser to Corby. McCarthy Tetrault LLP acted as legal adviser to Corby. Nomura International PLC acted as financial adviser to Pernod Ricard. Stifel acted as financial adviser, and Goodmans LLP acted as legal adviser to Ace Beverage Group.

About Corby Spirit and Wine Ltd.

Corby is a leading Canadian manufacturer, marketer and distributor of spirits and imported wines. Corby's portfolio of owned brands includes some of the most renowned brands in Canada, including J.P. Wiser's, Lot 40 and Pike Creek Canadian whiskies, Lamb's rum, Polar Ice vodka and McGuinness liqueurs, as well as the Ungava gin, Cabot Trail maple-based liqueurs and Chic Choc spiced rum, and Foreign Affair wines. Through its affiliation with Pernod Ricard, a global leader in the spirits and wine industry, Corby also represents leading international brands such as Absolut vodka, Chivas Regal, The Glenlivet and Ballantine's Scotch whiskies, Jameson Irish whisky, Beefeater gin, Malibu rum, Kahlua liqueur, Mumm champagne, and Jacob's Creek, Wyndham Estate, Stoneleigh, Campo Viejo, and Kenwood wines. Corby is a publicly traded company based in Toronto, Ont., and is listed on the Toronto Stock Exchange under the trading symbols CSW.A and CSW.B.

About Ace Beverage Group Inc.

Ace is a leading better-for-you beverage alcohol company in Canada. Its flagship brand, Cottage Springs, is one of the biggest and fastest-growing ready-to-drink brands in Canada. Additional popular brands include Ace Hill and Cabana Coast. Ace's mission is to develop, launch and market the world's best-tasting BFY alcoholic beverages.

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