Anheuser-Busch buys out Portland's Craft Brew Alliance
Anheuser-Busch will have complete control over the Craft Brew Alliance after the companies, in a joint statement on Monday, announced a pending buyout.
Previously, Anheuser-Busch owned a 31.2% stake in the Portland-based brewing company. The remaining shares were sold to the commercial giant for $16.50/share in a cash agreement.
"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 CBA, in the joint statement.
Under Anheuser-Busch's ownership, the Craft Brew Alliance will be a part of the parent company's Brewer's Collective.
CBA formed in 2008 as a Portland-based merger between Widmer Bros. brewing and Redhook Brewery. As of Monday's announcement, its portfolio also included Kona Brewing Co., Appalachian Mountain Brewery, Cisco Brewers, Omission Brewing Co., Square Mile Cider Co., and Wynwood Brewing Co.
Before the announcement of the sale, Anheuser-Busch already owned several other craft brands, including Oregon's 10 Barrel Brewing. The transaction is expected to be finalized in 2020, pending the approval of CBA shareholders who are not affiliated with Anheuser-Busch.
CBA was the seventh-largest craft brewing company in the United States, according to its website. However, that size may have placed it at a disadvantage in Portland, according to Samuel Holloway, an associate professor of strategy and entrepreneurship at the University of Portland's Pamplin School of Business, who has studied the craft brewing industry extensively.
"It was a classic legacy craft brewery stuck in the middle — too big to be local but not big enough to compete nationally," Holloway said. "They needed some deep pockets."
The newly announced deal will cost Anheuser-Busch $220 million, but that amount could have been higher. Under terms of an agreement, Anheuser-Busch, which at the time owned slightly less than a one-third share of CBA, had the option of buying the remaining shares at the cost of $24.50 per share — or approximately $475 million — by August of this year. Anheuser-Busch decided instead to pay a $20 million opt-out fee.
Even at a lower price point announced Monday, the sale is a smart move on the part of CBA in Holloway's opinion.
"I think it makes an incredible amount of sense," he said. "The price is lower than if it had been purchased in August, but (CBA) still more than doubled their share price."
Some industry analysts say it's a good business decision, but not so good for Portland's craft beer scene.
"This year, Bridgeport, which was Portland's oldest brewery, closed," said Jeff Alworth, author of The Widmer Way. "That left Widmer Brothers as the oldest Oregon brewery. Their sale to Anheuser-Busch, we've now lost, in the course of a year, our two oldest breweries."
Holloway, however, doesn't feel the same sense of gloom and doom when it comes to the local market.
While grocery store sales of craft beer are down, sales at local taprooms are on the rise. Meanwhile, many smaller Oregon-based breweries are looking at expanding their craft beer offerings by adding lighter beers and craft beverages such as hard seltzers.
"I don't think the sky is falling, even though the aggregate data looks ominous," Holloway said.
You count on us to stay informed and we depend on you to fund our efforts. Quality local journalism takes time and money. Please support us to protect the future of community journalism.