Two OG’s of the craft beer movement announced a mega-deal today. In a roughly $300 million transaction, Dogfish Head Brewing will merge with the Boston Beer Company (NYSE: SAM) of Sam Adams fame.
“We believe we are creating the most dynamic and diverse American-owned platform for craft beer and beyond,” said Jim Koch, Founder and Chairman of The Boston Beer Company in a press release. “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.”
Specifically, Dogfish Head will become part of Boston Brewing which also owns Angry Orchard hard cider, Truly Hard Seltzer, and Twisted Tea.
From the details, the deal sounds like much more of a partnership than a takeover. While Dogfish shareholders will receive a cash buyout totaling about $173 million, co-founders Sam Calagione and his wife Mariah will receive their compensation entirely in Boston Brewing stock. The 406,000 shares they are expected to pick up will make them the the largest non-institutional shareholders after Koch. The terms also call for Sam Calagione to gain Boston Beer’s board of directors in 2020.
“This merger better positions Dogfish Head and our co-workers to continue growing within this definition for many years to come,” said Sam Calagione, in a release. “In fact, Mariah and I believe so much in the future of our merged companies that we are all in, and personally we’re reinvesting nearly all of the proceeds back into the combined entity.
The release made a point to note that the combined company will state fall under the parameters of “craft brewing.” That definition issued by the trade group Brewers Association (BA) state that craft brewers produce less than 6 million barrels of beer annually and are less than 25 percent owned by a non-craft brewer. Of note, the Calagiones and Kochs were instrumental in founding the BA and creating said definition.
Boston Beer Chief Executive Dave Burwick (previously CEO of Peet’s Coffee & Tea Inc.) will continue to serve as CEO. George Pastrana, Chief Operating Officer and President of Dogfish Head, will continue to serve in that role.
“This is a formidable combination of brands, incredible brewing talent, and leaders who remain 100 percent focused and committed to the long-term health of our breweries and growing the beer industry. United, we will have the highest quality, most distinct, high-end portfolio, from both a price-point and product perspective with the top-ranked sales organization to bring it to market,” said Burwick. “We expect that we’ll see more consolidation in the Craft industry over time, and we’ll be in the best position to take advantage of those changes.”
Founded in 1984, Sam Adams beer is widely lauded for their key role in changes the American beer palate. Dogfish Head built a name for themselves around quirkiness coupled with an education centric ie “beer nerd” range.