New Belgium's employee owners approve sale to Lion
New Belgium’s employee owners have voted in favour of selling the brewery to Lion’s global craft division, Lion Little World Beverages.
Lion announced its intention to purchase the Colorado-based brewery, the country’s fourth largest craft brewery, in November for between US$350 million and US$400 million (between A$510 million and A$583 million). The proposed sale was contingent on a vote of New Belgium’s employee owners.
The ballot result was welcomed by Lion Little World Beverages’ Managing Director Matt Tapper.
“We are grateful to have the trust of New Belgium employees as we move forward to deal close,” Tapper said.
“New Belgium has great people, great brands and a great company. I can’t wait to get started.”
Local newspaper The Coloradoan reports that voting results were finalised on Tuesday local time, though New Belgium has declined to release thenumber of employees who voted or a breakdown on how they voted.
In a letter to its supporters on the announcement of the sale in November, founder Kim Jordan said that more than 300 employees would receive more than US$100,000 (A$145,000), “with some receiving significantly greater amounts”.
“Over the life of our ESOP, including this transaction, the total amount paid to current and former employees will be nearly US$190 million,” Jordan announced.
New Belgium CEO Steve Fechheimer also issued a statement confirming the outcome of the vote.
“Today, New Belgium ESOP participants voted in favor of the proposed transaction with Little World Beverages,” Fechheimer said.
“This result moves us one step closer towards New Belgium Brewing officially joining Lion Little World Beverages.
“We’re excited about the next chapter for NBB and continuing to prove business can be a force for good.”
New Belgium’s promise to be ‘a force for good’ has seen the business come under pressure in the US since announcing the sale to Kirin-owned Lion Little World Beverages. Human rights groups pressured the employee shareholders to vote against the sale, citing Kirin’s alleged business partnership Burmese military, “perpetrators of the genocide and crimes against humanity” in that country.
Kirin has a controlling interest in Myanmar Brewery, the country’s largest brewery, with the remainder owned by a business controlled by former members of the military. Kirin also has a 51% stake in Mandalay Brewery.
New Belgium’s sale came as the brewery reportedly struggled under debt incurred to fund the employee share ownership plan, as well as an ill-fated brewery expansion in North Carolina.
The brewery borrowed to build a USD140 million second brewery in Asheville, North Carolina, increasing production capacity by 50 per cent. The brewery opened in 2016 as growth in the US craft beer market slowed, which significantly impacted New Belgium. US Brewers Association figures show the brewery’s production fell from 957,969 barrels in 2016 to 848,609 barrels in 2018.
Lion Little World Beverages has not announced its plans for the New Belgium business post sale, however, it is believed to have ambitions for its Little Creatures brand, opening a brewpub in San Francisco in July. The New Belgium purchase would give Lion access to brewing capacity to fuel those plans.
The pressures facing New Belgium seems to have given Lion a bargain buy for the brand and brewing capacity. The reported sales price sees New Belgium valued at between (approximately) A$515 and A$587 per hL, based on its 2018 production.
By comparison AB InBev recently walked away from an option to buy the Craft Brew Alliance business at a price representing approx A$849 per hL, before eventually purchasing the business for the equivalent of approx A$566 per hL. That country’s eleventh largest craft brewer, Dogfish Head, was purchased by Boston Beer Company in May for approx $1250 per hL. Dogfish Head produced 275,784 barrels in 2018.