Spain & USA: Mahou San Miguel’s purchase of majority stake in Founders Brewing valued at $198.8 mln

Documents filed with the Michigan Liquor Control Commission show Spanish brewing conglomerate Mahou San Miguel’s deal to purchase a majority stake in Founders Brewing Co. is valued at $198.8 million, MLive.com reported on September 13.

That figure was listed as the price Mahou would pay for a 59 percent stake in Founders, according to a purchase agreement and other documents obtained by MLive/The Grand Rapids Press through the Freedom of Information Act.

The deal, announced last month, will boost Mahou’s ownership stake in Founders from about 30 percent to 90 percent.

Mahou purchased a roughly 30 percent stake in Founders in 2014. Liquor control commission records show that transaction was valued at $96.3 million.

In a statement, Founders said the purchase price referenced in the liquor control commission records represents an “inaccurate assumptions as to value.” The company declined to elaborate.

Pending state and federal approvals, the deal is expected to close next year. Founders co-founders Mike Stevens and Dave Engbers will each retain a 5 percent stake in the company.

Mahou’s move to purchase Founders, the largest brewery in the state, made waves in Michigan’s craft beer community. After the deal was announced, Stevens told MLive that the change will help Founders break into new markets and build its brand while maintaining a focus on quality, experimentation and innovation.

Founders was the 14th largest brewery in the nation in 2018, according to data complied by the Brewers Association, a nonprofit based in Boulder, Colorado that represents brewers.

The “Equity Purchase Agreement” between Founders and Mahou that was submitted to the liquor control commission lists $198.8 million as the “aggregate purchase price.” The document, dated July 9, was signed by various Founders shareholders, including Stevens and Engbers. It was also signed by Mahou representatives.

A license transfer agreement submitted to the liquor control commission by a limited liability company connected to Founders also lists $198.8 million as the “total purchase price.”

And a letter submitted to the commission on Aug. 18 by an attorney on behalf of the limited liability company connected to Founders states, “The purchase price to be paid to the selling members for the transfer of their respective interests is” $198.8 million.

David Harns, a spokesperson for the liquor control commission, also confirmed that the $198.8 million figure referenced in the documents it received from Founders is the price of the 59 percent ownership stake in the brewery.

In a statement issued by Founders after the Mahou deal was announced last month, the brewery said it “will remain autonomous in managing its business, products and teams.” Founders’ leadership team, including Stevens and Engbers, will remain in place.

“We’re fortunate to have a partner with whom we can exchange brewing knowledge and business strategy, who also reflects our values as a company,” Founders, in reference to Mahou, said in a statement last month. “Day-to-day operations will continue to be led by the existing Founders team. We’ll continue to make the beers we love and have a partner in Mahou Group, who is just as passionate about beer and the future of Founders as we are.”

Bart Watson, chief economist for the Brewers Association, said it’s difficult to put the Founders sale price into perspective because his organization doesn’t track brewery sales, and figures associated with such deals aren’t always made public.

But, in general, he said the sale price of some breweries has fallen in the past couple years due to a larger, more competitive marketplace.

“While it’s hard to compare these deals, we’ve seen values come down,” Watson said. “That Founders deal reflects the new environment. The multiples aren’t what they were a couple years ago when craft was growing at double digit rates and it seemed like it had a lot of room for growth.”

One of the first major deals between a craft brewery and a larger company involved Chicago-based Goose Island and Anheuser-Busch. Anheuser-Busch purchased the brewery in 2011 for $38.8 million, according to a story published in the Chicago Tribune.

In 2015, the Los Angeles Times reported that San Diego-based Ballast Point Brewing and Spirts was sold to Constellation Brands, whose portfolio includes Corona, Modelo and Pacifico, for $1 billion.

And in May, NPR published a report about the merger between Delaware-based Dogfish Head Brewery and The Boston Beer Co., which produces Samuel Adams Boston Lager. The deal, NPR reported, was valued at about $300 million in cash and stock.

14 September, 2019