{"id":165,"date":"2008-04-29T21:49:17","date_gmt":"2008-04-30T04:49:17","guid":{"rendered":"http:\/\/www.crapmonkey.com\/archives\/165"},"modified":"2008-04-29T21:49:17","modified_gmt":"2008-04-30T04:49:17","slug":"magic-hat-brewing-buys-pyramid-breweries","status":"publish","type":"post","link":"http:\/\/www.crapmonkey.com\/podcast\/?p=165","title":{"rendered":"Magic Hat Brewing to Buy Pyramid Breweries"},"content":{"rendered":"

\"MagicFor the last several months\u00a0I’ve been saying that Pyramid<\/a> was ripe to be bought.\u00a0 However, I anticipated a very large player (like Miller)<\/a> to swoop in and make the purchase.\u00a0 On that point, I was quite mistaken.\u00a0 Magic Hat Brewing Company<\/a> and Pyramid Breweries<\/a> announced that they will merge, pursuant to a letter of intent.\u00a0 The\u00a0plan is for Magic Hat to aquire Pyramid for $2.75 per share – the stock closed at $1.76 a day before the announcement.\u00a0 Once the assumption of Pyramid’s\u00a0ten million dollars in dept is taken into account, the deal will be valued at nearly 35 million dollars.\u00a0<\/p>\n

According to Pyramid CEO Scott Barnum, \u201cthe combination of these two well established, high profile craft breweries will be very complementary given our respective brand portfolios and the geographies in which we predominantly operate. Additionally, there will be a number of important benefits for Pyramid to be part of a private company versus continuing to operate as a stand alone public entity.”<\/p>\n

The CEO of Magic Hat, Martin Kelly stated that “we have a great deal of respect for Pyramid\u2019s brand heritage, award-winning beers and its dedicated employees…”\u00a0 Martin Kelly should know a little something about Pyramid given that he is an ex-employee.\u00a0\u00a0He joined Pyramid in 1999 as President and Chief Operating Officer, and then became the CEO in December of that year.\u00a0 In the years\u00a0that followed, Pyramid expanded its operations significantly, bringing on\u00a0two new\u00a0Alehouses (Walnut Creek and Sacramento) and acquiring the Portland Brewing Company.\u00a0 At the time of acquiring the Portland brewing company<\/a> in January of 2004, Kelly delivered a message that seems consistent with this current move, \u201cThe craft brewing business is very competitive and changes daily. To stay ahead, breweries must keep moving forward. Some breweries have chosen to go the route of aligning themselves with large, multinational, industrial brewers. We believe that approach can stifle creativity and lead to less choice for consumers. Our approach aligns two independent Northwest breweries and retains the creativity and integrity craft brewers are known for.”\u00a0<\/p>\n

It seems that as CEO of Vermont’s\u00a0Magic Hat Brewing<\/a>,\u00a0Kelly’s style has not changed.\u00a0 Prior to making this move to grow through the acquisition of\u00a0Pyramid,\u00a0Magic Hat was in the midst of an expansion project<\/a> that will double the capacity of its South Burlington Brewery.\u00a0<\/p>\n

In my opinion, aggressive growth can be a good thing.\u00a0 However, it can\u00a0also be a risk in the beer industry because slight changes in the landscape (ingredient availability, cost of sales, cost of metal for kegs, consumer preferences, etc) can have a severe impact on the bottom line.\u00a0 Could Pyramid have weathered the current industry climate had it not been so aggressive in the Martin Kelly years?\u00a0 That’s hard to say.\u00a0 Even\u00a0Redhook<\/a>\u00a0brewery,\u00a0(who has strong distribution ties with Anheuser-Busch<\/a>\u00a0and were once stock market investor favorites) have\u00a0had to resort to\u00a0merging with Widmer<\/a> in order to stay in the game.<\/p>\n

This move could also give Pyramid a chance to start over.\u00a0 With the Magic Hat buy out, Pyramid can escape the scrutiny of being a public company and return their focus to the core: brewing great beer.\u00a0 That\u00a0said, it will be interesting to see how or if the two breweries merge their\u00a0cultures and brands.\u00a0 Magic Hat is known for being fun and somewhat unpredictable.\u00a0 To the contrary, Pyramid is\u00a0a well thought out and dependable\u00a0brand.\u00a0\u00a0Magic Hat’s Website looks like the worst elements of\u00a0pop culture slammed into into it at full speed, while the Pyramid website feels conservative and stuffy.\u00a0 Most likely, the two will consolidate some of their business operations and perhaps some of their beer line (aka, some folks will be laid off), but both will continue to maintain their current brands and marketing philosophies.\u00a0 On the upside, both breweries may also get a foot in the door to distributors on\u00a0the opposite coast.\u00a0 As a result, Seattle folks may start to see more Magic Hat beer in the stores and the East Coast might start to see more Pyramid on the store shelves.\u00a0<\/p>\n

Whatever happens next, I hope it only strengthens Pyramid’s footing in the market and makes it an even more valuable asset to the Pacific Northwest.\u00a0 Still, I’m always skeptical about out of town ownership and I’m curious to see if Pyramid continues to feel like a resident of the Pacific Northwest given the new arrangement.\u00a0 At any rate, I guess there’s little more to\u00a0do now than\u00a0sit back, drink down a Thunderhead IPA<\/a>, and watch as the acquisition proceeds.<\/p>\n","protected":false},"excerpt":{"rendered":"

For the last several months\u00a0I’ve been saying that Pyramid was ripe to be bought.\u00a0 However, I anticipated a very large player (like Miller) to swoop in and make the purchase.\u00a0 On that point, I was quite mistaken.\u00a0 Magic Hat Brewing Company and Pyramid Breweries announced that they will merge, pursuant to a letter of intent.\u00a0 […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-165","post","type-post","status-publish","format-standard","hentry","category-beer"],"_links":{"self":[{"href":"http:\/\/www.crapmonkey.com\/podcast\/index.php?rest_route=\/wp\/v2\/posts\/165","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.crapmonkey.com\/podcast\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.crapmonkey.com\/podcast\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.crapmonkey.com\/podcast\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.crapmonkey.com\/podcast\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=165"}],"version-history":[{"count":0,"href":"http:\/\/www.crapmonkey.com\/podcast\/index.php?rest_route=\/wp\/v2\/posts\/165\/revisions"}],"wp:attachment":[{"href":"http:\/\/www.crapmonkey.com\/podcast\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=165"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.crapmonkey.com\/podcast\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=165"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.crapmonkey.com\/podcast\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=165"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}