When it came time to cash out a private equity investor, Dogfish Head Brewery founder Sam Calagione turned to an old friend, Boston Beer Co. chairman Jim Koch.
The result: Two former business rivals are now merger partners in a deal valued at roughly $300 million.
The deal marks the first significant acquisition in Boston Beer’s 35-year history. Koch said Calagione’s Delaware-based business received attractive offers from major global companies, but Calagione wanted to stay part of an independent, American-owned operation.
The deal, announced Thursday afternoon, will unite the brewer of Samuel Adams Boston Lager with the brewer of 60 Minute IPA, ranked 2nd and 13th, respectively, in sales volume among all craft beer companies, as tracked by the Brewers Association. The two companies said that by uniting they will be in a better position to compete against the industry’s behemoths. The combined business will be led by Boston Beer CEO Dave Burwick.
“It’s very much a joining of forces,” Koch said. “This is about growing in ways that we can’t do separately, growing better together, and about a common culture and values.”
Calagione and his family will receive about 406,000 shares of Boston Beer stock, valued at $128 million based on the average closing price of the shares over a 10-day period ending on Wednesday. Dogfish Head shareholders will also get $173 million in cash, primarily for the Delaware company’s financial investors, including that private equity firm, LNK Partners. The deal is expected to close by the end of June.
Calagione, however, will remain involved in the business. He gets a seat on Boston Beer’s board of directors in 2020, and he and his wife, Mariah, will be the biggest noninstitutional shareholders in Boston Beer, after Koch.
Dogfish Head is on pace to sell nearly 300,000 barrels for 2019, translating to net sales of at least $110 million for the year. In comparison, Boston Beer recently reported moving nearly 4.3 million barrels last year, and generated nearly $1.1 billion in revenue.
Koch said he has no plans to trim Dogfish Head’s 400-person workforce, as it joins with Boston Beer’s 1,500 employees. Instead, he pointed to expansion opportunities, saying Boston Beer can offer Dogfish Head more points of distribution.
“We’re going to help get them into more places. Hopefully, it will be easier to find your favorite Dogfish Head beer,” Koch said. “They don’t tell you this in business school, but the truly successful merger [partners] have complementary cultures where each makes the other better.”