The Boston Beer Company, Inc.and Dogfish Head Brewery announcedthe companies have signed a definitive merger agreement, bringing together two large independent Craft breweries and two founders and brewers,Jim KochandSam Calagione.
The transaction is valued at around $300 million and will bolster Boston Beer’s status as one of nation’stwo largest craft brewers. Dogfish Head ranks among the 15 largest craft brewers. The largest independent-craft brewer is Yuengling.
Dogfish has annual sales that are expected to total $110 million to $120 million. Boston Beer has revenue approaching $1 billion.
Following the transaction, the combined company will have a leading position in the high end of the U.S. beer market, bringing togetherBoston Beer’scraft beer portfolio and sales team with Dogfish Head’s portfolio of IPA and session sour brands.
— Dogfish Head Brewery (@dogfishbeer) May 9, 2019
The combined company will maintain its status as an independent craft brewery, as defined by theBrewers Association.It will be better positioned to compete against the global beer conglomerates within the craft beer category that are 50- and 100-times its size, while still representing less than 2 percent of beer sold inthe United States, a release stated.
Megabrewers have been acquiring craft brewers
Dogfish co-founders Sam and Mariah Calagione have elected to take substantially all of their merger proceedsin the form of Boston Beer stock and will collectively become the largest non-institutional shareholders afterJim Kochfollowing the close of the transaction.
Like Koch, Calagione is a New Englander, who grew up in Rhode Island. Wife and partner Mariah is a member of Delaware’s Draper family, which owns WBOC-TV and other media outlets on Delmarva.
The Dogfish brewery is based in Milton in Sussex County.
Sam Calagione will joinBoston Beer’sboard of directors and Dogfish Head’s co-workers will join theBoston Beerteam.
“We believe we are creating the most dynamic and diverse American-owned platform for craft beer and beyond,” saidJim Koch, founder and chairman of TheBoston Beer Company. “Dogfish Head has a proud history as a craft beer pioneer with a brand that is beloved by American consumers and highly respected by the industry. Sam and I have stood shoulder to shoulder in some of the defining efforts in craft brewing including the creation of theBrewers Association, the craft beer definition, the craft brewer seal and the creation of the SAVOR food and beer event. This combination is the right fit as bothBoston Beerand Dogfish Head have a passion for brewing and innovation, we share the same values and we will learn a lot from each other as we continue to invest in the high-end beer category. I am very happy that Sam will join the Board of Directors atBoston Beer. He is a tremendous friend, innovator and brewer, and I could not be more excited to work together with him for many years to come.”
“Not only are Dogfish Head andBoston Beertwo original American breweries, butJim Koch and I worked hard with other leading craft brewery founders and theBrewers Associationto develop and champion what defines independent American brewers,” saidSam Calagione, founder of Dogfish Head. “This merger better positions Dogfish Head and our co-workers to continue growing within this definition for many years to come. In fact, Mariah and I believe so much in the future of our merged companies that we areall in, and personally we’re reinvesting nearly all of the proceeds back into the combined entity. We’re also proud to announce that we intend to devote a percentage of theBoston Beerstock that we receive to establishing a foundation and funding various local charitable programs.”
The combined company will be led byBoston BeerCEO,Dave Burwick.
Boston Beerwas a pioneer in craft beer industry after opening its doors and brewing the first batch ofSamuel Adams Boston Lagerin 1984.
In addition to Sam Adamsbeer, the company now offers nationally other leading brands such as Angry Orchard hard cider, Truly Hard Seltzer and Twisted Tea.
Founded 23 years ago,Milton-based Dogfish Head’s family of beers includes 60, 90, and 120 Minute IPAs, and a sour beer program led by SeaQuench Ale.
Following the opening of their brewery and tasting room, Dogfish Head also established one of the first Craft distilleries in America,Dogfish Head Brewings & Eatsbrewpub, Chesapeake &Mainerestaurant, and theDogfish Head Inn. The newly combined company will maintain a significant presence inDelaware, a release stated.
The transaction is expected to close late in the second quarter of 2019, subject to customary closing conditions.Sam Calagioneand his family will receive approximately 406,000 shares ofBoston Beerstock based on a share price of$314.60. Dogfish Head shareholders will also receive$173 millionin cash, most all of which is for the benefit of Dogfish Head’s financial investors, with the exception of certain transaction-related expenses.
Boston Beerexpects that its current cash on hand and available line of credit will be more than sufficient to fund the cash component of the transaction. It is expected thatSam Calagionewill joinBoston Beer’sBoard of Directors beginning in 2020.
Dogfish Head is on pace to sell nearly 300,000 barrels in 2019, which would represent high single-digit growth versus the prior full year.
Net sales for the full year 2019 are expected to be between$110 and $120 million. Dogfish Head employs approximately 400 produces most of its beer at its brewery inMilton, DE, and sells its beer in more than 40 states.
Nixon Peabodyserved as legal counsel toBoston Beerin this transaction. Dogfish Head was advised byMcDermott Will & Emery LLP, andArlington Capital Advisors.