US-based craft spirits producer Eastside Distilling has acquired Azuñia Tequila from Intersect Beverage.

Azuñia’s portfolio includes Blanco Organic Tequila, Reposado Organic Tequila, Añejo Tequila, and Azuñia Black Tequila, which are on sale at on-premise locations across western and south-eastern US.

All tequilas of Azuñia are handcrafted using 100% pure Weber Blue agave and undergo a natural and open-air fermentation process. The products will be bottled onsite to ensure field-to-bottle quality.

Eastside Distilling interim CEO Steve Shum said: “There are clear opportunities for us to leverage Eastside’s off-premise distribution capabilities for the benefit of Azuñia, while at the same time providing the current Azuñia on-premise sales organisation new and exciting brands to present to their customer base, including our Redneck Riviera Whiskey, the Burnside family and Hue-Hue Coffee Rum.

“Further, we see an opportunity to improve the overall profitability of the brand through a modified SKU strategy between on and off-premise accounts that many of the larger, more established brands have implemented over the years.”

Under the terms of the deal, Eastside will acquire Azuñia in an all-stock transaction, providing Eastside may at its election pay a portion of the consideration in cash, or a three-year promissory note.

The initial consideration is subject to compliance with applicable Nasdaq rules and will not be more than around $14.7m in aggregate, based on future revenue performance.

Additionally, Eastside will issue a consideration of up to $1.5m after Azuñia business generates revenue of at least $9.45m in the period beginning from the 13th month of closing the deal and 24th month following the closing.

The deal is expected to enhance Eastside’s product offering and operational assets, which include more than 2,600 on-premise points of distribution, a direct sales team and a product line of premium and luxury tequila categories.

In May 2017, Eastside Distilling acquired a stake in US-based firm Big Bottom Distilling (BBD), which produces gins, whiskeys, brandies, rum and vodka.