Craft Brew Alliance Inc. (NASDAQ: BREW) shares more than doubled on Tuesday after the firm announced that Anheuser-Busch Inbev N.V. (NYSE: BUD) agreed to expand their partnership in the form of a merger transaction.
Essentially, Anheuser-Busch is agreeing to purchase the remaining shares that it doesn’t own of Craft Brew Alliance for $16.50 each, in cash. Anheuser-Busch currently owns a 31.2% stake in the company.
Note that the vast majority of Craft Brew Alliance’s brands are already distributed through Anheuser-Busch’s network of independent wholesalers per the companies’ existing commercial agreement. So this expanded partnership seems like a natural progression.
The transaction is subject to customary closing conditions, including approval by a majority of Craft Brew Alliance’s shareholders not affiliated with Anheuser-Busch and certain regulatory approvals. The transaction is expected to close in 2020.
This was a $16 stock back in July so not too much has changed, except for the big drop-off in August. Also this pullback came because Anheuser-Busch originally decided against making a qualifying offer to buy out the company at that time.
Andy Thomas, CEO of Craft Brew Alliance, said:
By combining our resources, our talented teammates, and dynamic brands, we will look to nurture the growth of CBA’s existing portfolio as we continue investing in innovation to meet the changing needs of today’s beverage consumers, all while delivering certainty of value to our shareholders.
Shares of Craft Brew Alliance traded up about 122% Tuesday, at $16.25 in a 52-week range of $7.11 to $17.40. The consensus price target is $14.50.