Anheuser-Busch InBev has officially acquired Craft Brew Alliance and the majority of the Kona ... [+]
It’s official: BREW has become BUD.
This morning, Craft Brew Alliance
Under the terms of the deal — the stage for which was set more than 25 years ago, when Widmer Brothers Brewery and Redhook Brewery sold minority stakes to A-B in exchange for guaranteed access to its robust nationwide distribution network — A-B will purchase the remaining 68.8% of CBA that it doesn’t already own for about $220 million.
As part of the combination, CBA shareholders will receive $16.50 per share, and CBA — which owns the Kona, Widmer, Redhook, Omission, and Cisco brands, among others — will no longer be traded on the NASDAQ
Meanwhile, CBA chief Andy Thomas and chief financial and strategy officer Christine Perich have officially joined A-B’s Brewers Collective business unit as general managers in charge of a combined 17 of the division’s 23 brands.
Thomas will manage Kona Brewing’s mainland brewing operations, and oversee the Blue Point, Devils Backbone, Platform, Wicked Weed, and Veza Sur offerings already owned by A-B as well as the Omission, Cisco Brewers, Wynwood Brewing and Appalachian Mountain Brewery brands that are coming over from CBA.
For her part, Perich will serve as GM of the 10 Barrel, Breckenridge, Four Peaks and Karbach breweries already owned by A-B as well as the Widmer , Redhook and Square Mile Cider brands previously owned by CBA.
A-B’s existing national craft brands Goose Island, Golden Road and Elysian Brewing will continue to be overseen by Todd Ahsmann, Dan Hamill, and Kyle Fitzsimmons, respectively. Ahsmann also manages the Virtue Cider brand.
Finally, Golden Road cofounder Meg Gill, who presently serves as the vice president of marketing for the Brewers Collective, will overlook the LQD and pH Experiment innovation teams.
The general managers of all 23 brands will report directly to Brewers Collective president Marcelo "Mika" Michaelis, who said the addition of CBA to the Brewers Collective business unit gives A-B more options to build and scale existing as well as emerging brands.
“During the process of analyzing the best possible model, we benchmarked ourselves with other segments and industries and we were able to find that this is dynamic enough and ultimately allows the breweries to continue to run independently in this GM/founder model,” Michaelis said.
According to a news release, A-B’s Brewers Collective business unit now totals more than 3,200 people across more than 40 breweries, brewpubs and taprooms in the U.S.
First announced last November, the proposed tie-up between the two companies was approved by shareholders in February and underwent a lengthy Department of Justice (DOJ) review that ultimately forced A-B and CBA to restructure their deal in order to get it across the finish line.
As part of their proposed settlement, the two companies agreed to divest CBA’s Kona Brewing operations in Hawaii — which includes a new 100,000-barrel brewery that is still under construction — to a startup called PV Brewing Partners. That group is backed by private equity firm VantEdge Partners and run by former A-B president Dave Peacock.
Earlier this month, the DOJ approved the combination, noting that the required divestitures in Hawaii would help “maintain competition in the beer industry in Hawaii benefiting consumers.”
According to the DOJ’s antitrust division, A-B and CBA control a combined 41% share of the Hawaii market.
“This merger, as originally structured, would have significantly increased market concentration in Hawaii and eliminated the growing competition between ABI and CBA brands,” Makan Delrahim, Assistant Attorney General of the DOJ’s antitrust division, said in a news release.
However, longtime industry observers of the two companies would argue that a divestment to PV Brewing Partners is merely window dressing.
In Hawaii, products from both companies will continue to be sold — as they have for years — by a wholly owned Anheuser-Busch distributor called Anheuser-Busch Sales of Hawaii, Inc.
Those familiar with the beer business, and the long-standing relationship between CBA and A-B, know that distributors are the true gatekeepers and can often make the difference between success and failure in such a hyper-competitive industry.
So, while Peacock and a Kansas-based private equity firm will operate the Kona brewery in Hawaii and license the brand’s intellectual property from A-B, much of the blocking and tackling on the ground will continue to fall under A-B’s purview.
Nevertheless, the DOJ has allowed the deal to move forward and the rest — as they say — is history.
“The last shares of CBA have already traded,” Thomas said in an interview on Tuesday. “There were a lot of good emotions, but also some mixed emotions today because we’re closing a chapter and starting a new one. CBA ceases to exist as a company tomorrow. The deal closes tomorrow, and A-B and CBA become one big happy family tomorrow.”
