Constellation to acquire craft brewer Ballast Point for $1B
- Constellation Brands has agreed to acquire San Diego, CA, craft brewer Ballast Point Brewing & Spirits for nearly $1 billion. The deal marks Constellation's first step into the bustling craft beer business and the largest craft beer acquisition to date.
- Ballast Point is expected to sell about 4 million cases this year, a more than 100% increase in volume over last year, with a 51.7% gross margin. The company is also expected to report net sales of about $115 million, which makes the offer an 8.7X multiple of Ballast Point's annual sales.
- The deal is expected to close by 2015's end and derails Ballast Point's previous plans to go public after filing for an initial public offering last month.
Constellation is one of the last of the largest companies selling beer in the U.S. to acquire a craft brewer, as the company saw rivals Anheuser-Busch InBev (Elysian, Golden Road), MillerCoors (Saint Archer), and Heineken (50% stake in Lagunitas) all make craft acquisitions over the past year as the craft beer category snags more market share from larger beer brands.
What separates Constellation from companies like AB InBev and MillerCoors is its focus on imported brands that are still faring well in the market, even gaining market share, like Corona and Modelo. At the same time, AB InBev and MillerCoors brands, particularly in the light beer category, are struggling to hold their ground in the U.S.
"Ultimately, we felt like a deal with Constellation would allow us to do what we know how to do best and let them deal with the Wall Street issues," Ballast Point founder Jack White Jr. told Brewbound. "There was a lot of work that went into the IPO and that was a sign of all the work we would have been focused on as a public company going forward."
Also attractive to Constellation was that in Ballast Point's distribution network, about 50% of the craft brewer's wholesalers also sell Constellation brands. The pending merger of AB InBev and SABMiller could have an impact on distribution for U.S. craft brewers.
What Constellation does not acquire with the deal are Ballast Point's individual spirit brands.