Anheuser-Busch Inbev is buying out the rest of Craft Brew Alliance in a $320 million deal.
Craft Brew Alliance (CBA) is the larger company that owns Redhook Brewing, Widmer Brothers Brewing, Kona Brewing, and some lesser-known brands. For some time now, Anheuser-Busch Inbev has owned approximately one-third of the publicly-traded company, but A-B Inbev is now poised to take possession of the other two-thirds of Craft Brew Alliance.
So, finally, it is official. Budweiser really does own Redhook, something that many people, especially people around Seattle, have somewhat mistakenly believed for years. (I explained that, to much chagrin, in a previous post).
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Exactly what this means for the Redhook Brewlab in Seattle, and exactly what this means for the current employees at Craft Brew Alliance in Portland, is not yet know. Any speculation would be, well, speculative at best. The deal is still a long way from closing. There’s no reason to believe that decisions have been made about such granular details.
“Today’s announcement represents an exciting next step in a long and successful partnership with Anheuser-Busch, whose support for the growth of our business and brands traces back over 25 years,” said Andy Thomas, CEO of Craft Brew Alliance. “By combining our resources, our talented teammates, and dynamic brands, we will look to nurture the growth of CBA’s existing portfolio as we continue investing in innovation to meet the changing needs of today’s beverage consumers, all while delivering certainty of value to our shareholders.”
“Anheuser-Busch has a long track record of working with its craft partners to help make the U.S. beer category stronger and more vibrant,” said Michel Doukeris, CEO of Anheuser-Busch. “Our partnership with CBA goes back many years and we look forward to supporting CBA as they continue to bring great products to beer drinkers across the U.S.”
How did we get here?
August 27, 2019 was the strike date that came and went without a deal. According to a previous agreement, that was the date on which AB-Inbev needed to exercise its option to purchase the remaining portion of Craft Brew Alliance at a predetermined price of $24.50 per share. That is, it had an option to purchase the two-thirds of the company it did not already own.
At that time, Craft Brew Alliance stock was trading at about $12 per share, which explains why no one was surprised that AB InBev balked. Instead of paying $24.50 per share, or $475 million for the entire company, AB Inbev chose to pay $20 million to opt-out of the deal, a price that was also part of the prenegotiated deal. The news caused Craft Brew Alliance stock to drop to about $10 per share.
Fast-forward to November 11, 2019, and we find Anheuser-Busch Inbev announcing its plans to buy the rest of Craft Brew Alliance for about $321 million instead of $475 million. That’s $16.50 per share instead of $24.50 per share. What’s $154 million between friends, right? Shares of Craft Brew Alliance soared to $16.32 following the announcement. The deal is expected to close in 2020, reportedly.
I think that most people in the beer industry have been waiting for the other shoe to drop for a long time. Now it has.
Unfortunately I sold widmer/red hook for over a decade here in Seattle, what kept CBA afloat the last 6 years is Kona’s vertical growth. Red hook and Widmer threw the towel in over a decade ago, constant employee-brewer turnover, never really had a solid seasonal, just kept brewing subpar convenience store/walgreen shelf beer. Really pathetic effort. Can’t imagine ABI doing any better in Seattle market, they have essentially given up on the on-premise. I guess this is an adrenaline rush for shareholders.
I used to work at Redhook before the Widmer brothers aquired the brewery. When they took over as CBAI then ran the brewery to the ground by changing formulas and making crap not craft beer