ABI Buys Four Peaks

ABI four-peaks
Anheuser-Busch InBev announced this morning that they were buying Arizona brewer Four Peaks. Four Peaks is nearly twenty years old and Arizona’s largest brewery, on track to make approximately 70,000 barrels in 2015. As a nod to just how routine this type of news is becoming, ABI’s press release is titled “Anheuser-Busch Welcomes Four Peaks Brewing Company To The High End Business Unit.” The price was not disclosed and as is typical, the founders of the brewery will be remaining with the business.

Today, Anheuser-Busch announced an agreement to acquire Four Peaks Brewing Company, the leading craft brewer in the state of Arizona. Four Peaks will represent the sixth operation to join the growing list of innovative and progressive craft breweries within The High End, the company’s business unit providing unique craft and import brands.

“For 20 years we’ve had more amazing experiences than I can count doing what we love to do most – brewing great beer and sharing it with a growing craft community in Arizona that has supported us from day one,” said Andy Ingram, Four Peaks co-founder. “We’re excited to join the enthusiastic team and tap into their resources to expand our footprint and share our beer with even more people moving forward.”

Four Peaks, which opened its doors in 1996, expects to sell approximately 70,000 barrels of beer in 2015. The brewery will continue to brew their award-winning beers, including their flagship beer, Kilt Lifter, a Scottish-Style Ale that accounts for more than 60 percent of the brewery’s sales. Four Peaks also produces popular limited releases like cask versions of its mainstay beers and its four-time World Beer Cup-medaling Hopsquatch Barleywine. In addition to strong mainstay beers and limited releases, Four Peaks has seen great success with newer brews like its Pumpkin Porter, which grew more than 150 percent last year.

“As the leading craft brewery in Arizona, we’re proud of what we’ve built and of our brewing heritage. We’re excited to build on that success with The High End,” said Jim Scussel, Four Peaks co-founder. “Arizona has a rapidly-growing fan base for craft beer and we look forward to more opportunities to share what Four Peaks is about within our local community, and beyond,” added Randy Schultz, Four Peaks co-founder.

Four Peaks will join Goose Island Beer Company, Blue Point Brewing Company, 10 Barrel Brewing, Elysian Brewing Company and Golden Road Brewing as part of the growing portfolio of exceptional craft beers within The High End.

“It’s exciting to partner with another group of passionate craft beer founders, this time in the great state of Arizona,” said Andy Goeler, CEO, Craft, The High End. “What Andy, Jim, Randy and the team have been able to accomplish is remarkable and a testament to their culture and portfolio of great beers. We look forward to learning from each other and bringing more Four Peaks beers to craft lovers in the Southwest.”

The partnership includes the company’s three primary locations: the 8th Street Brewery & Pub in Tempe; the Wilson Street Brewery & Tasting Room in Tempe; and the Grill & Tap in Scottsdale, in addition to continuing their partnership at the Sky Harbor Airport facility. Anheuser-Busch’s acquisition of Four Peaks is expected to close during the first quarter of 2016. Terms of the agreement were not disclosed.


Consumers File Lawsuit To Stop ABI Buying SABMiller

In a particularly strange twist, 23 consumers — 19 from Oregon, 3 from California and 1 from Washington — have filed a lawsuit in the United States District Court, for the District of Oregon, Medford Division. The Plaintiffs are represented by two law firms, the Alioto Law Firm of San Francisco, California, and Cauble & Cauble, LLP of Grant’s Pass, Oregon. The lawsuit names both Anheuser-Busch InBev and SABMiller as Defendants and the initial filing requests “Injunctive Relief to Prohibit the Acquisition of SABMiller PLC by Anheuser-Busch InBev, SA/NV as a Violation of Section 7 of the Clayton Antitrust Act, 15 U.S.C. § 18.” The 33-page complaint is available to read online as a pdf. The Oregonian is reporting on at least a few of the Plaintiff’s rationales for the lawsuit. “I don’t think it’s good for consumers, I don’t think it’s good for industry, I don’t think it’s good for the tax base, I don’t think it’s good for any of that,” states Plaintiff James DeHoog, who owns an air quality and environmental consulting business in Central Point, which is near where the case was filed in Medford, Oregon. Courthouse News Service also has an account of the filing.

It will certainly be interesting to see how far they get with this.

Court Gavel And Money

Beer In Ads #1736: Quality Beer From Belgium

Saturday’s ad is for Stella Artois, from 2006. This is not a particularly old ad, but it’s meant to look older, or at least more classic, than it is. I really like the visuals of it, if not the beer itself. But then I love flags and am an amateur vexillologist. I visited the Stella Artois brewery in Leuven last year, with a large group of beer judges, and it holds the record for “worst beer tour” ever. Not the longest (that was a couple of days later) but they kept us sweating in hot, confined area, restricted our movement like they were afraid we were spies and generally treated us like children. Oh, and I later found out they thought we were rude, which is hilarious. I had also hoped that at the source, I’d finally understand what all the fuss is abut the beer. Nope, it still didn’t taste very good, at least to me.


SABInBev Will Control 6 Of 10 Best-Selling U.S. Beers

According to a new report in Business Insider, the new entity combining Anheuser-Busch InBev and SABMiller will control six out of the ten best-selling beers in America, and it would have been eight, except the deal currently stipulates that “Molson Coors will take Miller off of SABMiller’s hands.” But I especially like the handy flowchart they created to show the evolution of the various companies that will come together to become SABInBev, or whatever they end up calling the new beer behemoth. Sadly, it looks like SABMiller, or what’s left of it, will simply be absorbed into ABI.


SABInMillerBev, or “A Brief History Of Big Beer”

Niall, at the Missing Drink, has an interesting post about the possible buyout of SABMiller by Anheuser-Busch InBev. Entitled A Brief History of Big Beer, he provides some analysis of the deal, but I especially like his helpful chart of the M&A of all the major players, which is below. It’s great to see them laid out to encapsulate the history of those big deals, especially in recent decades.

Click here to see the chart full size.

Here’s his clever take on what the newly minted entity might be called, and what a new alphabet soup logo might look like. It was genius taking the “AB” from ABI and putting it with the “S” from SAB. It certainly will be interesting to see what new name (and logo) does emerge if the deal ultimately goes through.


SABMiller and Anheuser-Busch InBev Reach “Agreement In Principle”

abib sabmiller
While most of us were sleeping, it appears SABMiller and Anheuser-Busch InBev were quite busy, and announced this morning SABMiller and Anheuser-Busch InBev [Reach] Agreement in principle and extension of PUSU. The New York Times has an analysis of the deal, or you can read the entire Press Release from SABMiller:


LONDON–The Boards of AB InBev (Euronext: ABI) (NYSE: BUD) and SABMiller (LSE: SAB) (JSE: SAB) announce that they have reached agreement in principle on the key terms of a possible recommended offer to be made by AB InBev for the entire issued and to be issued share capital of SABMiller (the “Possible Offer”).

Terms of Possible Offer

Under the terms of the Possible Offer, SABMiller shareholders would be entitled to receive GBP 44.00 per share in cash, with a partial share alternative (“PSA”) available for approximately 41% of the SABMiller shares.

The all-cash offer represents a premium of approximately 50% to SABMiller’s closing share price of GBP 29.34 on 14 September 2015 (being the last business day prior to renewed speculation of an approach from AB InBev).

The PSA consists of 0.483969 unlisted shares and GBP 3.7788 in cash for each SABMiller share, equivalent to a value of GBP 39.03 per SABMiller share on 12 October 2015, representing a premium of approximately 33% to the closing SABMiller share price of GBP 29.34 as of 14 September 2015. Further details of the PSA are set out below.

In addition, under the Possible Offer, SABMiller shareholders would be entitled to any dividends declared or paid by SABMiller in the ordinary course in respect of any completed six-month period ended 30 September or 31 March prior to completion of the possible transaction, which shall not exceed USD 0.2825 per share for the period ended 30 September 2015 and a further USD 0.9375 per share for the period ended 31 March 2016 (totalling USD 1.22 per share) and shall not exceed an amount to be agreed between AB InBev and SABMiller in respect of periods thereafter (which shall be disclosed in any announcement of a firm intention to make an offer).

The Board of SABMiller has indicated to AB InBev that it would be prepared unanimously to recommend the all-cash offer of GBP 44.00 per SABMiller share to SABMiller shareholders, subject to their fiduciary duties and satisfactory resolution of the other terms and conditions of the Possible Offer.

Antitrust and reverse break fee

In connection with the Possible Offer, AB InBev would agree to a “best efforts” commitment to obtain any regulatory clearances required to proceed to closing of the transaction. In addition, AB InBev would agree to a reverse break fee of USD 3 billion payable to SABMiller in the event that the transaction fails to close as a result of the failure to obtain regulatory clearances or the approval of AB InBev shareholders.


The announcement of a formal transaction would be subject to the following matters:

  1. a) unanimous recommendation by the Board of SABMiller in respect of the all-cash offer, and the execution of irrevocable undertakings to vote in favour of the transaction from members of the SABMiller Board, in a form acceptable to AB InBev;
  2. b) the execution of irrevocable undertakings to vote in favour of the transaction and to elect for the PSA from SABMiller’s two major shareholders, Altria Group, Inc. and BevCo Ltd., in each case in respect of all of their shareholding and in a form acceptable to AB InBev and SABMiller;
  3. c) the execution of irrevocable undertakings to vote in favour of the transaction from AB InBev’s largest shareholders, the Stichting Anheuser-Busch InBev, EPS Participations SaRL and BRC SaRL in a form acceptable to AB InBev and SABMiller;
  4. d) satisfactory completion of customary due diligence; and
  5. e) final approval by the Board of AB InBev.

The Board of AB InBev fully supports the terms of this Possible Offer and expects (subject to the matters above) to give its formal approval immediately prior to announcement.

AB InBev reserves the right to waive in whole or in part any of the pre-conditions to making an offer set out in this announcement, other than c) above which will not be waived.

The conditions of the transaction will be customary for a combination of this nature, and will include approval by both companies’ shareholders and receipt of antitrust and regulatory approvals.

In view of the timetable for obtaining some of these approvals, AB InBev envisages proceeding by way of a pre-conditional scheme of arrangement in accordance with the Code.

The cash consideration under the transaction would be financed through a combination of AB InBev’s internal financial resources and new third party debt.

Further details of the PSA

The PSA comprises up to 326 million shares, which will be available for approximately 41% of the SABMiller shares. These shares would take the form of a separate class of AB InBev shares (the “Restricted Shares”)[1], with the following characteristics:

  • Unlisted and not admitted to trading on any stock exchange;
  • Subject to a five-year lock-up from closing;
  • Convertible into AB InBev ordinary shares on a one for one basis after the end of that five year period;
  • Ranking equally with AB InBev ordinary shares with regards to dividends and voting rights; and
  • Director nomination rights.

SABMiller shareholders who elect for the partial share alternative will receive 0.483969 Restricted Shares[2] and GBP 3.7788 in cash for each SABMiller share.

Extension of the PUSU deadline

In accordance with Rule 2.6(a) of the Code, AB InBev was required, by not later than 5.00 pm on 14 October 2015, to either announce a firm intention to make an offer for SABMiller in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer for SABMiller, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies.

In accordance with Rule 2.6(c) of the Code, the Board of SABMiller has requested that the Panel on Takeovers and Mergers (the “Panel”) extends the relevant deadline, as referred to above, to enable the parties to continue their talks regarding the Possible Offer. In the light of this request, an extension has been granted by the Panel and AB InBev must, by not later than 5.00 pm on 28 October 2015, either announce a firm intention to make an offer for SABMiller in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer for SABMiller, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline will only be extended with the consent of the Panel in accordance with Rule 2.6(c) of the Code.

AB InBev reserves the following rights:

  1. a) to introduce other forms of consideration and/or to vary the composition of consideration;
  2. b) to implement the transaction through or together with a subsidiary of AB InBev or NewCo or a company which will become a subsidiary of AB InBev or NewCo;
  3. c) to make an offer (including the all-cash offer and PSA) for SABMiller at any time on less favourable terms:

(i) with the agreement or recommendation of the Board of SABMiller;
(ii) if a third party announces a firm intention to make an offer for SABMiller on less favourable terms; or
(iii) following the announcement by SABMiller of a whitewash transaction pursuant to the Code; and

  1. d) to reduce its offer (including the all-cash offer and PSA) by the amount of any dividend that is announced, declared, made or paid by SABMiller prior to completion, save for ordinary course dividends declared or paid prior to completion, which shall not exceed USD 0.2825 per share for the period ended 30 September 2015 and a further USD 0.9375 per share for the period ended 31 March 2016 (totalling USD 1.22 per share) and shall not exceed an amount to be agreed between AB InBev and SABMiller in respect of periods thereafter (which shall be disclosed in any announcement of a firm intention to make an offer).

The announcement does not constitute an offer or impose any obligation on AB InBev to make an offer, nor does it evidence a firm intention to make an offer within the meaning of the Code. There can be no certainty that a formal offer will be made.

A further announcement will be made when appropriate.


Patent No. 7810679B2: Beer Dispensing System With Gas Pressure Reservoir

Today in 2010, US Patent 7810679 B2 was issued, an invention of Albert W. Wauters, Ian Anderson, and Edward P. Duffy, assigned to Anheuser-Busch Inbev S.A., for their “Beer Dispensing System with Gas Pressure Reservoir.” Here’s the Abstract:

A home beer dispensing apparatus has a keg having a self-contained bag filled with a beer and a pressure system. The pressure system creates a pressurized air space between the keg inner walls and the bag to assist in the dispensing of the beer. The pressure system has a keg one-way air valve mounted to a top wall of the keg to permit entry of pressurized air into the keg. The pressure system has a pressure reservoir mounted in the dispensing apparatus outside the keg and in fluid flow communication with the keg one-way valve. The reservoir stores a charge of pressurized air and supplies at least a portion of this charge to the keg through the keg air valve when the dispensing apparatus is operated to dispense the beer. The reservoir provides a reserved charge of pressurized gas that is on hand to reduce dampening pressure fluctuations during beer dispensing which can result in beer frothing, especially during the early stages of beer dispensing when the air head space in the keg is small. Further, the apparatus may also have a pressure sensing system adapted to measure time rate of pressure change in the keg. The apparatus has a signaling device responsive to the time rate of pressure change in the keg to produce a signal related to volume of beer remaining in the bag. Preferably, the signal is displayed visually on the dispensing apparatus.


Labatt Breweries Buys Mill Street

Mill-Street labatt
This morning, Labatt Breweries, itself part of the family of brands owned by Anheuser-Busch InBev, announced that they were purchasing Toronto’s Mill Street Brewery.

From the press release:

Labatt Breweries of Canada today announced that it has purchased Mill Street Brewery, an award-winning craft brewer based in Toronto. The deal will allow Mill Street to deepen its traction with consumers in the fast growing craft beer segment, where it has an extraordinary variety of unique beers, as well as brew pubs in both Toronto and Ottawa. To help achieve this, Labatt will immediately invest $10 million in Mill Street’s Toronto brewery, which includes a state-of-the-art brewhouse and packaging capabilities.

“Mill Street has continually distinguished itself with its energy and success in innovation, and powerful commitment to great-tasting quality beer,” said Labatt president Jan Craps. “Our partnership and investment will accelerate its growth in one of the most dynamic beer segments, while fully preserving Mill Street’s creative character and pioneering spirit.”

“With the success of Mill Street has come the challenge of serving a growing demand for our brands,” said Irvine Weitzman, Mill Street CEO, who will continue with Mill Street along with co-founder Steve Abrams and famed brewmaster Joel Manning. “Our partnership with Labatt is a natural evolution in our growth that will allow more Canadians to enjoy our beer and secure the legacy of our brands by allowing us to remain focused on the authentic characteristics that have made Mill Street what it is today.”

Founded in Toronto’s Distillery District in 2002, Mill Street is an award-winning craft brewery and the largest producer of certified organic beer in Canada. It has won numerous beer quality awards including the Canadian Brewery of the Year Award in three consecutive years. Core brands include Ontario’s first organic beer, Mill Street Original Organic Lager, along with 100th Meridian, Tankhouse Ale, and Cobblestone Stout. The brewer is also renowned for permanent specialties including a strong golden ale Betelgeuse, an Irish-style red ale Bob’s Bearded Red and nitrogen-charged Vanilla Porter, as well as for several small-batch specialty beers.

“Throughout our history, our dedication to our craft and our passion for pushing the envelope have allowed Mill Street to make waves in Canada’s craft beer segment,” said Abrams. “We are excited about the prospect of working with Labatt to build even further on our successes and sharing our brands with more beer lovers across Canada.”

Mill Street brands will continue to be brewed under the expertise of brewmaster Joel Manning.
“This investment in a state-of-the-art brewhouse that Mill Street will run on a stand-alone basis positions us to reach the very top of our craft,” added Manning. “We couldn’t be more pleased by this fantastic opportunity to further entrench our reputation for innovation and quality, and bring more great brands to more consumers.”

Labatt and Mill Street Brewery announce purchase agreement
From left to right: Irvine Weitzman, Mill Street CEO, Jan Craps, President of Labatt, Joel Manning, Brewmaster at Mill Street, and Steve Abrams, Co-Founder of Mill Street. (CNW Group/Labatt Breweries of Canada)

SABMiller Rejects Buyout Offer From A-B InBev

abib sabmiller
SABMiller released a statement this morning rejecting the latest takeover offer from Anheuser-Busch InBev. You may, or may not, be able to read the statements released by SABMiller on their website, and there are some fairly scary disclaimers including language that, depending on your jurisdiction, claims that the publicly available information may not be legal to read, and in such case advise you to “exit this web page.” Which while I’m sure is required by some law, probably UK law, also feels fairly ridiculous. At any rate, quite a few news outlets, such as the Wall Street Journal, Reuters and the New York Times are all reporting on it, so it must be okay for the likes of me.

The gist of it is the SABMiller board unanimously rejected ABI’s latest takeover offer, for the primary reason that they believe ABI’s offer “substantially” undervalues their company (currently the offer values SABMiller at $104 billion), among a few other technical reasons having to do with the timing, regulatory issues and others. The current offer is for roughly £65.14 billion, which is $99.76 billion dollars.

The Wall Street Journal helpfully created a graphic showing the recent history of the potential deal as it’s been unfolding.


There’s little doubt this is not the end of it, but there will continue to be a back and forth as this high-stakes game unfolds. And it really is a game, sad to say. Apparently negotiations have been tense, which really should not come as a shock to anybody, yet you see statements like this. “AB InBev is disappointed that the board of SABMiller has rejected both of these prior approaches without any meaningful engagement.” The absurdity of that reveals the gamesmanship involved, as it plays out in the media. It’s going to be an interesting few weeks.