Indianapolis-based National Wine & Spirits Inc. is joining forces with an out-of-state wholesale beverage distributor, presumably to better compete against a rival that won a bitter battle to sell liquor in Indiana.

National announced Wednesday morning that it will become Republic National Distributing Co. of Indiana after Dallas-based Republic National completes the purchase of “certain assets” of National.

Terms were not announced, but both companies are portraying the deal as an equal partnership.

The acquisition follows a November ruling from the Indiana Alcohol and Tobacco Commission to drop its opposition to Miami-based Southern Wine & Spirits of America Inc.’s request to distribute alcohol in Indiana.  

Even though National controls nearly 60 percent of the Indiana market, it is one-tenth the size of Southern. Southern holds distribution agreements with alcohol manufacturers in 29 states, an advantage that National fears it will leverage to steal away its Indiana contracts.

National should benefit from Republic’s size. It is the second-biggest distributor of premium wine and spirits in the country, with operations in 18 states and Washington, D.C., according to the company’s Web site.  
 
National distributes wine and spirits in Indiana and Michigan, and employs more than 1,000 people in the two states. Republic will have about 7,000 employees following the deal with National.

Phone calls to National seeking comment on the deal were not immediately returned. But, in a written release, National Owner and Chairman Jim LaCrosse said Republic emerged, after a careful review of options, as the clear choice with whom to partner.

“[Republic] has a reputation for its integrity and its commitment to excellence in sales and customer service,” LaCrosse said. “Our combined organizations will ensure our new company will continue to grow.”

LaCrosse has called Southern “the 800-pound gorilla,” warning the commission that Southern would drive his company out of business in Indiana.

The commission’s decision to drop its opposition to Southern was surprising. Its unanimous ruling in favor of Southern reversed two previous rulings—also made unanimously—that denied Southern’s application for permits.

In 2008, the commission turned Southern away because the owners of the company dwell outside Indiana. That residency restriction, however, was effectively nixed in a Sept. 14 opinion by the Indiana Attorney General’s Office.

The next day, the commission denied Southern again, this time citing anticompetitive behavior in other states.

As part of its agreement with Republic, National announced Chief Operating Officer John Baker will remain in that position under the new structure.

Baker said in the announcement that the transaction will close as soon as the licensing process is completed.

The two companies had been in discussions for several months, Republic President Tom Cole said.

“The addition of Indiana to our organization continues to underscore our commitment to build [Republic] into the best network of wine and spirits wholesalers in America,” Cole said in the release.