E-Malt.com News article: USA, MI: Bell’s Brewery Inc. may be sold this fall

As early as fall, the decision to sell Bell’s Brewery Inc., the nation's 13th largest brewery, could be made depending on the outcome of ongoing negotiations with several minority shareholders, company president Larry Bell was quoted as saying by MLive.com on April, 29.

Later in May, Bell's will offer public tours of its new 200-barrel brewhouse at the Comstock facility, a major portion of a $52 million expansion project announced in 2010 during the company's 25th anniversary.

About $22 million has been spent on the brewhouse and renovating the Eccentric Cafe in downtown Kalamazoo, but the rest of the project is on hold as the company tries to save money in an attempt to buy out 11 of the 14 shareholders, Bell said.

Bell, 53, and his two children, Laura and David, own a majority of the company's shares, which total 60,000, according to Michigan's Department Licensing and Regulatory Affairs. He said his goal is to pass Bell’s Brewery Inc. on to the next generation, but he hasn’t ruled out selling their shares if a resolution cannot be reached.

“Unfortunately with the growth and the size the company has gotten to, the alarms are going off to where we have to figure it out or do something else,” Bell said. “I don’t want to sell, but it’s a great time to sell if I had to. There are many willing buyers.

"If it was just a family business, there would be legal maneuvers we could make that would facilitate that kind of transfer across generations. With its current structure, I'm not able to do those sorts of things. It would basically leave us in the position of selling the company upon my death."

It’s the latest and possibly last chapter of a “bumpy” relationship between Larry Bell and some of the company’s current and former shareholders that included a lawsuit in 2007.

Gordon and Suann Squires, of Plainwell, became shareholders in 1985 and Gordon helped build the original brewery, he said. He would not say what they plan to do with their 90 shares.

“We have not made a decision yet. I have good feelings for him and I wish him luck and I’d like to see his daughter take over the company," he said. As for other shareholders, Squires said he does not know any of them, "I wouldn't have the slightest idea how the rest of them feel."

Bell said he has “never had any serious discussions” with a buyers in the past, but some private equity companies and large breweries have expressed interest in buying Bell’s, which produced more than 180,500 barrels last year and are projecting to make more than 230,000 this year.

“Just to think of (selling) breaks my heart, but I have to look at the whole thing realistically,” he said.

Larry Bell said his bout with cancer four years ago made him think more about the future of the company and his children’s role in it. Laura Bell, 26, is the marketing director for Bell’s Brewery, while David, 24, lives in Washington, D.C., and helps on Bell’s-related events in that market, but has no formal title, outside of being a shareholder. While Larry Bell said his health is fine, he joked that if he were killed in a zombie attack, the company would have to be sold.

“We, as a family, have to soon figure out what’s going to happen. Unfortunately, the way this thing is structured, this company is structured, it’s not sustainable. I’m not set up estate-wise to guarantee it can be handed over to the kids. We’ve been trying to work on that,” Bell said.

Bell said the company spent more than $100,000 on legal fees last year to tender an offer to shareholders, but the move did not get the response he had hoped for.

“I thought people would exit the company,” he said.

Bell said there was a shareholders meeting in March, but no resolution was made. He said he plans to continue conversations with shareholders, including a meeting with one next month.

Bell said he has stopped new investments in the company, including pulling the plug on its plans for a canning line in the new brewhouse and ended some of its philanthropic efforts with Kalamazoo organizations in an effort to save money and make another tender offer to the shareholders in the fall.

“Our goal is to make this thing economically sustainable for generations,” he said. “That may not be the goal of everyone in the company.”

Larry Bell was 27 when he opened what would become a beer-making empire. His first child, Laura, was two months old. Growing up, Laura Bell, who will turn 27 in July, said she remembered spending Saturday afternoons at the brewery and also picking hops with her dad and brother at farms around Southwest Michigan.

“The smell of beer brewing or homebrewing is one of the most comforting smells. It smells like home,” she said.

As a teenager, she didn't always feel that way.

“I had stayed away from it (the brewery) a little bit, but I thought it’s the family’s company and I owe it to myself to try it out,” she said.

She started in sales in East Lansing and learned to put on events and other aspects of the company. She said she began to fall in love with the company and its impact on Michigan and the craft-beer industry. She moved back to Kalamazoo in the summer of 2008 and started working in every department in the production facility. Employees didn’t give her a pass.

She had to take her lumps like most everyone else. While working a third shift brewing Hopslam, she ended up ruining 35 barrels of the expensive brew. Another time, she made a mistake that resulted in being covered in “hop yeast sludge at 3 in the morning.”

As the marketing director, Laura Bell has taken on a much more visible role as Larry Bell delegates more of the company’s duties.

“Beer tends to be more of a young person’s sport. I just can’t do it as much as I used to,” Larry Bell said.

Laura Bell has also been living with her father for the last nine months while she shops for her own house in Kalamazoo.

“We’ve developed a closer relationship by working together … that’s a lot of fun," Larry Bell said. "I’m really proud of her and the job she’s done. She really has a passion for the business. She’s not the one to say my last name is Bell and collect a paycheck. She worked hard and has an emotional interest in the employees and the industry."

The education by fire changed her perspective on the company.

“My dad worked really hard. I’m so glad I get to work at Bell’s now because I get to understand what he was building back then," Laura Bell said. "I understand some of late nights more or the work trips and stuff like that because I see what there is now. I get it. Back then, it was hard to understand what was going on because he was so busy.”

Larry Bell has been attempting to buy out the company’s shareholders for years. In March of 2006, there were 39 shareholders in the company, with the Larry J. Bell Trust owning 56.2 percent, according to a document provided by a former shareholder who asked not to be named.

In 2007, several shareholders filed a lawsuit in Kalamazoo County Circuit Court. While those shareholders eventually settled and parted ways, other shareholders continue to have investments in the company.

According to court documents, the plaintiffs said that in 2005, “defendant Bell began to execute a plan designed to reduce the number of shareholders and increase his own percentage of ownership in Bell's Brewery. Defendant Bell threatened various actions including suppressing company growth and simultaneously threatening the defendant, Bell's Brewery, will lack resources to pay shareholders in the future."

It said "Bell forced, encouraged and/or persuaded shareholders ... to redeem stock at a price established by defendant Bell." The lawsuit was dismissed in November, 2008, and several former shareholders would not comment on the specifics of the lawsuit for this story because of the terms of the settlement.

Some other shareholders have sold in recent months. Gloria and David Badiner, of Mattawan, who had been shareholders for more than 20 years, sold their portion a "couple months ago," Gloria Badiner said.

Terry Gilbertson, who moved from Kalamazoo to Minnesota in 1999, was the former chairman of the board at Bell’s in the early ’80s, he said. In January, Gilbertson said he sold his last share.

“Larry wanted it more than I did,” he said.

Other current shareholders either declined to comment or did not return messages seeking comment. When asked to describe his relationship with some shareholders, Larry Bell said, “It’s pretty bumpy. It’s been a bumpy relationship for a long time."

While Bell’s will be unveiling its new brewhouse at the Comstock facility, in the background lurks a discussion about the future of the company.

“It’s very stressful to have everything go so great and building a new brewery, and not knowing, as the CEO of the company, knowing where to take things. There’s very little room to maneuver,” Larry Bell said.

"It's a lot of stress for me. It keeps me up at night."


02 May, 2012