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Magnolia Brewing Company on Haight Street.
Photo: Magnolia Brewing / YelpMagnolia Brewing Company on Haight Street.
Magnolia Brewing Company on Haight Street.
Magnolia Brewing Company on Haight Street.
New Belgium Brewing Company will likely be acquired by Lion Little World Beverages, a Kirin company, in a move announced Tuesday.
As Brewbound first reported, Lion Little World reached a "definitive agreement" to acquire New Belgium, including San Francisco's Magnolia Brewing Company, which New Belgium purchased with Dick Cantwell and Belgian brewery Oud Beersel in 2017. The deal is pending approval from regulators and shareholders in New Belgium’s employee stock ownership plan.
To complete the deal, Lion Little World — an Australian company — would also buy out the minority stakes currently owned by Cantwell and Oud Beersel, though Cantwell will continue to work at Magnolia in an undisclosed capacity. The full terms of the deal were also not disclosed.
Kim Jordan, who co-founded New Belgium in 1991 with her then-husband Jeff Lebesch, will also remain on, but in an advisory role.
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Jordan released a letter to the brewery's fans on the New Belgium website as the news came out, stating that the company would cease to be employee-owned after the acquisition — a status the company reached in 2012 — but that hundreds of affected employees would each be receiving over $100,000 in retirement money, with some being given "significantly more." Over the course of the ESOP (employee stock ownership plan), the total amount allocated to employees, both current and former, will equal "nearly $190 million."
The letter also gives some insight into the decision. Jordan explains that Lion Little World was "captivated" by New Belgium's B Corporation status (meaning it engages in social accountability and environmentally-conscious practices, among other things), and is requesting it retain the designation of being a "force for good."
Jordan also describes New Belgium's financial positioning leading up to the deal. As she says, New Belgium "needed to balance cash demands of our ESOP and selling shareholders" with the need for brand growth and more brewing capacity. It wasn't possible to manage the "competing priorities" well.
"As we surveyed the landscape over the last several years, we found that options to raise capital while being an independent brewer weren't realistic for us," she continues. "Some of the most widely used options by craft brewers were going to compromise a lot about what makes New Belgium great; environmental sustainability, and a rich internal culture."
The deal, she notes, is all contingent on share-holding co-workers, who will need to approve the conditions of the agreement.
New Belgium will continue to run its Fort Collins brewing headquarters, though the brewery will reportedly cease to operate as a small and independent brewery by the Brewers Association definitions, meaning New Belgium will no longer be considered "craft," as Brewbound reported. The Brewers Association confirmed as much to SFGATE, saying, "If and when this deal goes through New Belgium would no longer be considered a small and independent U.S. craft brewer, and they would no longer be counted in our craft brewer data set."
When asked about New Belgium losing its "craft" status, Jordan was terse: "The world evolves."
Magnolia Brewing Company was founded by brewer Dave McLean in San Francisco in 1997. The compact brewpub saw immediate success in the Haight-Ashbury district, leading McLean to pursue a larger brewhouse and pub project in the Dogpatch in the early 2010s.
The project, however, met roadblock after roadblock, eventually contributing to Magnolia's filing for Chapter 11 bankruptcy in 2015. McLean sold the brewery to New Belgium in 2017, with minority stakes going to Cantwell (formerly of Elysian Brewing in Seattle) and Belgium's Oud Beersel. (McLean has since moved on to help found Admiral Maltings in Alameda.)
"New Belgium will purchase the minority share of Magnolia that it does not currently own before the transaction closes, so that brand and breweries will also come together with Little World and New Belgium should the deal go ahead," a spokesperson for Magnolia told SFGATE. "We’re excited to have Dick Cantwell also be a part of our business going forward and playing a key role in our combined future."
It's not clear yet what's to come in the long run for Magnolia's two San Francisco locations, on Haight Street and in Dogpatch, but a look at the new Little Creatures brewpub in Dogpatch, which is also owned by Kirin subsidiary Lion Little World Beverages, could be some indication that nothing will outwardly change for fans and patrons.
For now at least, it's "business as usual" for Magnolia, says New Belgium CEO Steve Fechheimer to SFGATE.
"Magnolia and its breweries will also come together with Little World and New Belgium should the deal go ahead. We are excited to have them continue to be in the family, and look forward to continuing to serve customers at Magnolia’s two locations.”
For New Belgium, Jordan is looking forward to what's next, adding "We are as committed to being a vibrant, values-driven enterprise as we’ve ever been, and we look forward to having a beer with all of you along the journey."
Alyssa Pereira is an SFGate digital editor. Email: alyssa.pereira@sfgate.com | Twitter: @alyspereira
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Magnolia Brewing, New Belgium likely to be acquired by Kirin's Lion Little World Beverages - SF Gate
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