Economy

Dogfish Head Merges With Boston Beer Co

Dogfish Head Merges With Boston Beer Co”

Shareholders in Dogfish Head Brewery, based in DE, also will receive $173m in cash, and Calagione will join the board of Boston Beer. The purchase of Dogfish shows while Boston Beer may have diversified beyond the popular beverage in an effort to meet changing consumer tastes, it hasn't given up on the signature product that has come to define the New England company.

It also looks like Dogfish Head fans need not worry about the brand suffering any local fallout.

"By joining forces we'll be able to successfully compete while retaining our position and leadership within the indie craft market, alongside our 7500-ish fellow American small brewers", the joint letter continued.

Beer lovers familiar with both companies have mixed reactions.

When you hear about brewery mergers, they often involve two or more mega-brands incorporating into a super company, such as Anheuser-Busch being acquired by Belgian-Brazilian brewer InBev, or sometimes a craft brewery being swallowed up by a industrial brand - such what happened when beer, wine and spirits juggernaut Constellation Brands gobbled up Ballast Point Brewing for $1 billion dollars in 2015.

"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 Co. "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".

Specifically, Dogfish Head will become part of Boston Brewing which also owns Angry Orchard hard cider, Truly Hard Seltzer, and Twisted Tea.

Boston Beer (NYSE:SAM) had its price target hoisted by equities researchers at Macquarie from $325.00 to $365.00 in a report issued on Friday, BenzingaRatingsTable reports. There's an emotional element at play when two craft founders realize the landscape has changed so drastically they need to make a bold move before being gulped up by that Big Beer boogeyman.

The combined company will be led by Boston Beer CEO, Dave Burwick.

Dogfish Head will be keeping its name and location. Dogfish co-founder Sam Calagione will join Boston Beer's Board of Directors beginning in 2020.

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.

The transaction is expected to close late in the second quarter of 2019, subject to customary closing conditions. A copy of the definitive transaction agreements will be filed with the Securities and Exchange Commission (SEC). Net sales for the full year 2019 are expected to be between $110 and $120 million.

The deal brings together the second largest craft brewer in the US, Boston Beer, with the 13 largest, Dogfish Head, according to figures from the Brewers Association.

"More than a dozen of our peers have sold to global conglomerates, others have come together through platforms bringing a handful of craft breweries together in roll-ups", the founders of Dogfish Head, Sam and Mariah Calagione, said in a statement.



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