You know, what's better than beer? Cheaper beer.
Anheuser-Busch InBev SA
BUD, + 0.29%
the largest brewer in the world, found a way to buy some well known beer brands – including the Kona Brewing Co. and the Redhook Brewery – for less than a price few months according to a monday ad. Budweiser's maker and a number of other beers said he plans to buy the nearly 70% of Craft Brew Alliance Inc., which he does not yet own, for $ 16.50 a share.
This price is more than double that of Craft Brew
BREW, + 0.55%
The closing price of $ 7.33 is lower than the current share price in July. The Craft Brew share fell in August and September after AB InBev decided not to buy the company at a previously agreed higher price.
In 2016, AB InBev and Craft Brew signed a long-term partnership for distribution and other areas of initiatives that included an option for AB InBev to buy Craft Brew at a rising price – $ 22 per share within one year, 23, $ 50 per share for the second year and $ 24.50 per share for the third year. At the end of three years, when AB InBev had not agreed to make the purchase, it agreed to pay Craft Brew $ 20 million.
Last summer, AB InBev opted for the latter option, which costs more than $ 20 million and waives the option to buy the company. Having traded between $ 12 and $ 21 per share since the deal closed, Craft Brew shares fell to less than $ 8 in the two months since the deal failed.
That gave AB InBev – which has bought a number of craft beer brands in recent years who want to harness the popularity of such beers among discerning drinkers – a chance to buy at a discount, even if it's not seems to be, if one judges only the closing price of the share and the purchase price. AB InBev already owns 31.2% of the Craft Brew Alliance, so the company will receive around $ 221 million worth of more than $ 320 million when the deal is made. Even with the payment of 20 million dollars, it saves millions of what the 2016 deal would have to pay.
AB InBev expects to buy the shares in cash as long as the deal is approved by the other shareholders of Craft Brew. The companies expect the deal to be completed next year.
See also: The World's Largest Brewer Replaces Paper Labels with "Tattoos" on Bottles Widmer Brothers, Redhook and Omission Brewing Co., which focus on gluten-free beers, sell the Hawaiian brewer's longboard stock and other offerings in bottles Grocery stores in the USA. "Kona is a scarce commodity whose value is partially offset by declines in the Widmer and Red Hook brands," MKM Partners analyst Bill Kirk said in a September note that puts the company on a 16-target buy rating USD prompted. "We estimate that Kona alone has a value of approximately $ 350 million for shareholders, which is approximately 80% above the current share price. This unrealistically implies a significant negative value for Widmer and Red Hook.
Craft brew shares gained more than 120% on Monday after close. The shares traded by AB InBev in the US were quiet in the extended session.