BOSTON, May 9, 2019 /PRNewswire/
-- The Boston Beer Company, Inc. (NYSE: SAM) and Dogfish Head
Brewery today announced that the companies have signed a definitive
merger agreement, bringing together two pioneering independent
Craft breweries and two illustrious founders and brewers,
Jim Koch and Sam Calagione.
Together, Boston Beer and Dogfish Head will create a powerful
American-owned platform for craft beer and beyond. The new
entity will possess more than half a century of Craft brewing
expertise, a balanced portfolio of leading beer and "beyond beer"
brands at high end price points, and industry leadership in
innovation and quality. Following the transaction, the combined
company will have a leading position in the high end of the U.S.
beer market, bringing together Boston Beer's craft beer portfolio
and top-ranked sales team[i] with Dogfish Head's award-winning
portfolio of IPA and session sour brands.
The combined company will maintain its status as an independent
Craft brewery, as defined by the Brewers Association. It will
be better positioned to compete against the global beer
conglomerates within the craft beer category that are 50- and
100-times its size, while still representing less than 2% of beer
sold in the United States.
Most importantly, this combination brings together two of the
leading founder-brewers in the United
States, Jim Koch of Boston
Beer and Sam Calagione of Dogfish
Head, both of whom will continue to lead brewing innovation for the
newly-combined company. Sam and Mariah
Calagione, Dogfish Head's two co-founders, have elected to
take substantially all of their merger consideration in the form of
SAM stock and will collectively become the largest
non-institutional shareholders after Jim
Koch following the close of the transaction. Sam Calagione will join Boston Beer's board of
directors and Dogfish Head's band of off-centered co-workers will
join the Boston Beer team and continue to be heavily involved in
beer and "beyond-beer" projects, as the companies expand
opportunities for future innovation.
"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. "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. Sam and I have
stood shoulder to shoulder in some of the defining efforts in Craft
brewing including the creation of the Brewers Association, the
craft beer definition, the craft brewer seal and the creation of
the SAVOR food and beer event. This combination is the right fit as
both Boston Beer and Dogfish Head have a passion for brewing and
innovation, we share the same values and we will learn a lot from
each other as we continue to invest in the high-end beer
category. I am very happy that Sam will join the Board of
Directors at Boston Beer. He is a tremendous friend,
innovator and brewer, and I could not be more excited to work
together with him for many years to come."
"Not only are Dogfish Head and Boston Beer two original
American breweries, but Jim Koch and
I worked hard with other leading craft brewery founders and the
Brewers Association to develop and champion what defines
independent American brewers," said Sam
Calagione, founder and brewer of Dogfish Head. "This merger
better positions Dogfish Head and our co-workers to continue
growing within this definition for many years to come. 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. We're also proud to announce that we intend to devote a
percentage of the Boston Beer stock that we receive to establishing
a foundation and funding various local charitable programs."
The combined company will be led by Boston Beer CEO,
Dave Burwick. "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. 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."
Boston Beer is recognized for helping launch the craft beer
industry after opening its doors and brewing the first batch of
Samuel Adams Boston Lager in
1984. From the launch of craft brewing to 2019 Sam Adams
continues to be the most award-winning craft brewer in the world.
In addition to its iconic Sam Adams
beer, the company now offers nationally other leading brands such
as Angry Orchard hard cider, Truly Hard Seltzer and Twisted
Tea. Founded 23 years ago, Delaware-based Dogfish Head's family of beers
includes the continually-hopped 60, 90, and 120 Minute IPAs, and
robust sour beer program led by SeaQuench Ale. Dogfish Head is
recognized as an early leader in bringing culinary innovations to
the U.S. craft beer scene, and Sam
Calagione was named 'Outstanding Wine, Spirits, or Beer
Professional' by the prestigious James Beard Foundation. Following
the opening of their brewery and tasting room, Dogfish Head also
established one of the first Craft distilleries in America, Dogfish
Head Brewings & Eats brew pub, Chesapeake & Maine restaurant, and the Dogfish Head Inn.
The newly combined company will maintain a significant presence in
Delaware.
Terms of the Transaction and Impact on the Boston Beer
Company's 2019 Financial Outlook
The transaction is
expected to close late in the second quarter of 2019, subject to
customary closing conditions. Sam
Calagione and his family will receive approximately 406,000
shares of Boston Beer stock based on a share price of $314.60. Dogfish Head shareholders will
also receive $173 million in cash,
most all of which is for the benefit of Dogfish Head's financial
investors, with the exception of certain transaction-related
expenses.
Boston Beer expects that its current cash on hand and available
line of credit will be more than sufficient to fund the cash
component of the transaction. It is expected that Sam Calagione will join Boston Beer's Board of
Directors beginning in 2020. A copy of the definitive transaction
agreements will be filed with the Securities and Exchange
Commission (SEC).
Dogfish Head is on pace to sell nearly 300 thousand barrels for
the full year 2019, which would represent high single digit growth
versus the prior full year. Net sales for the full year 2019 are
expected to be between $110 and
$120 million. Dogfish Head employs
approximately 400 employees, produces most of its beer at its
brewery in Milton, DE, and sells
its beer in more than 40 states. Boston Beer plans to
consolidate Dogfish Head results into Boston Beer's financial
results beginning late in the second quarter of 2019 and Boston
Beer currently estimates that the transaction will be neutral to
slightly accretive in 2019 and will not have a material impact on
full-year 2019 earnings per diluted share.
Advisors
Nixon Peabody served as legal counsel to Boston Beer
in this transaction. Dogfish Head was advised by McDermott Will & Emery LLP, and Arlington
Capital Advisors.
About the Boston Beer Company
The Boston Beer
Company, Inc. (NYSE: SAM) began in 1984 when Founder and Brewer Jim
Koch used a generations-old family recipe to brew beer in his
kitchen. Inspired and unafraid to challenge conventional thinking
about beer, Jim brought the recipe to life with hopes drinkers
would appreciate the complex, full-flavor and started sampling the
beer in Boston. He named the flagship brew Samuel Adams Boston Lager in recognition of one
of our nation's founding fathers, a revolutionary man of
independent and pioneering spirit. Today, Samuel Adams is the world's most award-winning
Craft brewery and remains focused on crafting the highest quality
beers through innovation and experimentation in the relentless
pursuit of better. Our portfolio of brands also includes Angry
Orchard Hard Cider, Twisted Tea, Truly Hard Seltzer, Marathon
Brewing Company, Wild Leaf Hard Tea and Tura Alcoholic Kombucha as
well as several other craft beer brands brewed by A&S Brewing,
our craft beer incubator. For more information, please visit
our investor relations website at www.bostonbeer.com, which
includes links to all of our respective brand websites.
About Dogfish Head Brewery
Dogfish Head has proudly
been focused on brewing beers with culinary ingredients outside the
Reinheitsgebot since the day it opened as the smallest American
craft brewery 23 years ago. Dogfish Head has grown into a top-20
craft brewery and has won numerous awards throughout the years
including Wine Enthusiast's 2015 Brewery of the Year and the James
Beard Foundation Award for 2017 Outstanding Wine, Spirits, or Beer
Professional. It is a 400 coworker company based in Delaware with Dogfish Head Brewings &
Eats, an off-centered brewpub and distillery, Chesapeake &
Maine, a geographically enamored
seafood restaurant, Dogfish Inn, a beer-themed inn on the harbor
and Dogfish Head Craft Brewery, a production brewery and distillery
featuring, The Tasting Room & Kitchen. Dogfish Head supports
the Independent Craft Brewing Seal, the definitive icon for
American craft breweries to identify themselves to be
independently-owned and carries the torch of transparency, brewing
innovation and the freedom of choice originally forged by brewing
community pioneers. Dogfish Head currently sells beer in over
40 states and Washington D.C. For
more information, visit www.dogfish.com.
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[i] Tamarron Supplier Survey - 2018
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SOURCE The Boston Beer Company, Inc.