Anheuser-Busch to buy Goose Island for $38.8 million

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(Chicago, IL) – In what will likely be the largest acquisition of the year for small breweries, Anheuser-Busch, Inc. announced that it will buy 16 year-old Goose Island Beer Co..

[Update 1: Chicago Breaking Business reports that Brewmaster, Greg Hall, is stepping down.]

[Update 2: According to a press release, a) John Hall will stay on as CEO, b) the two breweries brewpubs will not be part of the deal and will remain open, C) AB is going to put $1.3 million into the Fulton Street facility as early as this summer to help it expand and D) No disruption to supply in current markets or with current wholesaler contracts.]

[Update 3: Goose Island has added the announcement to its website.]

[Update 4: Kate Bernot, Contributing Editor at The Feast Chicago, says Head Brewer, Brett Porter, (currently at GI, formerly at Deschutes) will take over Greg Hall's duties as Brewmaster.]

[Update 5: HOOK (Craft Brewers Alliance) stock is up over 6% in morning trading. The stock price was only $2.50/share just one year ago and is at $8.75 today.]

[Update 6: Per Beernet, "Just spoke with A-B ceo Dave Peacock: A-B will NOT brew Goose Island beers in St. Louis. Will expand capacity in Chicago and brew there."]

[Update 7: Here is the official press release on Anheuser-Busch naming Brett Porter as the new brewmaster at Goose Island.]

[Update 8: Timeout Chicago Magazine interviewed Brewmaster, Greg Hall, who is stepping down from his role. He will stay in a brewmaster capacity until April 30 and then will be on the board as an advisor on beers, branding and strategy.]

[Update 9: HOOK stock (Craft Brewers Alliance) closes the day up 12.4% to $9.26/share according to Yahoo Finance. It's lost in the shuffle that the group has an additional $16 million to use in competing with other small brewers now.]

[Update 10: Re-reading that Timeout interview with Greg Hall, I realize that I glossed over this: "It gives me money to start something new and a little bit of flexibility. I can’t really talk about what I’ll be doing for another month or so but it won’t be beer."]

[Update 11: Goose Island Brand Ambassador, Ken Hunnemeder, said on Twitter, "The beers will not change." When asked what the deal meant for the future, he responded, "I think it was inevitable and will allow us to make great beers that got bumped from the lineup."]

[Update 12: From Dave Kesmodel of the Wall Street Journal, Dave Peacock, president of [Anheuser-Busch's] U.S. division, said Monday: “We really needed to radically change our position in the high end.”]

[Update 13: A well-formed and unique response (given much of today's negative reaction) to the news by author of multiple craft beer books, Andy Crouch...]


Original post:

What a turn of events. The deal is for $38.8 million split up between AB buying 58% for $22.5 million and Craft Brewers Alliance selling its 42% stake in the company for $16.3 million. AB has been handling distribution for Goose Island for the past five years.

Crain’s Chicago reported in early February:

“Goose Island Beer Co. has hired an investment banker to find financing to help it spread its wings.

The Chicago craft brewer is working with Chicago-based Livingstone Partners LLC to line up backers to expand its brewing capacity, which is maxed out, says John Hall, Goose Island’s founder and president.

Mr. Hall, 68, hopes to find venture capitalists willing to take a stake in the fast- growing business but leave his family in control.”

Looks like they found a better deal than venture-backed funding….

Here’s an excerpt of the beneficial ownership report, released within the past hour:

On March 27, 2011, Anheuser-Busch, Incorporated (“ABI”), a subsidiary of Anheuser-Busch Companies, Inc., and Craft Brewers Alliance, Inc. (“CBA”) entered into a binding term sheet by which ABI will purchase the 42% interest in Fulton Street Brewery, LLC (“FSB”) owned by CBA (the “CBA Interest”) for a purchase price of $16,300,000 in cash, reductions in the distribution fees to be paid by CBA to ABI under the existing distribution arrangements between the parties, amendments to the minority rights held by ABI and additional commercial considerations described below. FSB is a Chicago-based brewer of malt beverage products under the “Goose Island” brand.

ABI had previously entered into an equity purchase agreement (the “GHI Proposal”) with Goose Holdings, Inc. (“GHI”) to purchase GHI’s 58% interest (the “GHI Interest”) in FSB for a purchase price of $22,500,000. Pursuant to the FSB operating agreement between GHI and CBA, GHI notified CBA that CBA was required either (i) to match the GHI Proposal on the same terms provided in the equity purchase agreement or (ii) to sell the CBA Interest in FSB to ABI for a purchase price of $16,300,000 (being 42% of the aggregate price that would be paid by ABI for all of FSB). The GHI Proposal conditioned the obligations of each of GHI and ABI to consummate the transaction on CBA’s agreement to sell the CBA Interest to ABI. Although the exchange and recapitalization agreement between ABI and CBA (“Exchange and Recapitalization Agreement”) prohibited CBA from acquiring the GHI Interest without the consent of ABI or the waiver by ABI of certain provisions of that agreement, ABI advised CBA on March 25, 2011 that should the CBA board of directors determine to purchase the GHI Interest, ABI would provide the necessary waiver.

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