At one fun point, when it appeared Anheuser-Busch wasn’t going to purchase full ownership of beer, cider and botanical spritzer rollup Craft Brew Alliance, a highly engaged activist shareholder released an open letter saying CBA should sell to someone already. So, it’s not too much of a surprise that when AB did finally invite CBA to be a full member of the family, that shareholders would bend the knee.
Yesterday, CBA announced that its shareholders voted at a special meeting of shareholders (probably like this) to approve the agreement announced Nov. 11, 2019, that says AB will agree to purchase the remaining CBA shares it does not already own in a merger transaction for $16.50 per share, valuing the company at $321 million. To the press release!
“On behalf of CBA’s Board of Directors and executive team, I would like to thank our shareholders for their overwhelming support of this proposed combination with AB,” said David Lord, chairman of Craft Brew Alliance. “In addition to delivering value for our shareholders, today’s outcome reflects the tremendous success that CBA and AB have achieved in their decades-long partnership. By joining with AB, we look forward to accelerating the potential of CBA’s distinctive portfolio, led by Kona Brewing Company as a truly distinctive lifestyle brand, while continuing to invest in our local communities.”
The transaction is expected to close in 2020, subject to closing conditions and requisite regulatory approvals (see below). CBA’s combined portfolio (brands like Kona Brewing Co., Appalachian Mountain Brewery, Cisco Brewers, Omission Brewing Co., Redhook Brewery, Square Mile Cider Co., Widmer Brothers Brewing and Wynwood Brewing Co.) made it the 12th largest brewer in the United States in 2018 by sales volume. Formed in 2008 via the merger of Widmer Brothers and Redhook, CBA is headquartered in Portland and operates breweries and brewpubs across America. The history of CBA and AB goes back to important moments like in 1994 when Widmer and Redhook sold minority stakes to AB and 2011 when CBA sold its stake in Goose Island to AB. I highly suggest you read this story.
Early this month, the U.S. Department of Justice asked for additional information and documentation from both Anheuser-Busch InBev and Craft Brew Alliance on the transaction, according to a filing with the U.S. Securities and Exchange Commission. We’re not sure what that info was, but let’s take the way back machine to 2016 when the Justice Department released settlement requirements with Anheuser-Busch InBev, noting it would only allow AB-InBev to acquire SABMiller if it divested its stake in MillerCoors. But that wasn’t the only part of the settlement. The DOJ needed to approve craft beer acquisitions. From the statement:
The settlement also prohibits ABI from instituting or continuing practices and programs that limit the ability and incentives of independent beer distributors to sell and promote the beers of ABI’s rivals, including high-end craft and import beers. Moreover, the settlement precludes ABI from acquiring beer distributors or brewers — including non-HSR reportable craft brewer acquisitions — without allowing for department review of the acquisition’s likely competitive effects.
“The remedy we secured will help preserve and promote competition in the multi-billion dollar U.S. beer industry,” said Deputy Assistant Attorney General Sonia Pfaffenroth of the Justice Department’s Antitrust Division. “The two largest U.S. brewers — ABI and MillerCoors — will now remain independent competitors after the deal. The settlement also preserves the ability of smaller brewers — including brewers of craft and import beers — to compete against ABI by protecting their access to important distribution networks. Independent distributors that sell ABI’s beer will have the freedom to sell and promote the variety of beers that many Americans drink.”
From the latest info we could gather: Anheuser-Busch Inbev market share in America has shrunk from 48.8 percent in 2008 to 40.8 percent in 2018, according to the National Beer Wholesalers Association. Will the DOJ approve the acquisition? Probably.