Let’s rake over the take-overs…

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Whilst writing my normal monthly diary, (March’s ventures are here) there was so much corporate finance news that we felt it appropriate to put into this separate piece.

Wicked Weed: Wicked? Hardly.

The most stunning announcement was that Wicked Weed had agreed to be taken over by Anheuser-Busch InBev. This is a mere 15 months after the latter’s Super Bowl ad mocked craft beer for amongst other things, producing “fruit cup” beer. It took less than 2 minutes on Ratebeer to find the following listing for Wicked Weed: Black Angel cherry sour, Cali Orange pale ale, Cherry Go Lightly, Currant Raspberry IPA, and Elderberry Saison, and there are many more.

The backlash was not just consumer led: Collaborations (for instance, with Jester King) were cancelled, the brand was pulled from stores and bars (including by Brewdog, which reeks of hypocrisy given their recent news), and more than half of the 70 brewers who had been invited to the annual Funkatorium International event pulled out.

A couple of days later, Heineken took full control of the rest of Lagunitas, which was far less of a surprise or controversy as they already owned 50% from September 2015.

Redchurch promoted their latest Crowdcube funding round. In January 2016 (so just after the boost from Camden’s successful sale) they raised £500k on the site, on a valuation of £2.2m, based upon their own sales and profit forecasts. However, they missed the sales figures by approximately 50%, so that the prediction of a £1k profit turned into a £170k loss. Fourteen months later they are back for another £400k, but ludicrously the valuation is now £5m, or more than double.

It is inconceivable that a business can spectacularly miss its targets and yet double in value.

At worst, Crowdcube are just picking numbers out of thin air. At best, as the FT (https://www.ft.com/content/5f7ce680-038c-11e5-b55e-00144feabdc0) reported, Beauhurst, a data firm, found that crowdfunding valuations were too high and therefore investors were paying too much. As I’ve written, at present, I would regard crowd-funding as glorified Clubcard schemes giving juicy product discounts, rather than serious equity investment vehicles.

It was gratifying to read that the FT (https://www.ft.com/content/1161a174-2b68-11e7-bc4b-5528796fe35c) agreed  (http://beerinsider.com/lack-of-equity-at-brewdog/0) about the confusion at Brewdog between debt and equity, and the unsatisfactory nature of the founders cashing in whilst the investors were not allowed to.

Finally, The Morning Advertiser excitedly announced (http://mobile.morningadvertiser.co.uk/Drinks/Beer/Carlsberg-plans-to-buy-UK-craft-brewery) that Carlsberg were planning to buy a UK craft brewery, via an exclusive podcast from their CEO Julian Momen. Specifically, they were looking “to bolster…growing portfolio with an artisan British beer”. They added that they had recently “acquired the UK rights to sell Brooklyn Lager in the UK” as a start to the process.

This is hardly surprising and suggests to me that they not very far down the path. If they had actually chosen a specific target, and certainly if they were in meaningful talks, then they would be keeping their cards as close to their chest as possible, to avoid flushing out a rival bid and consequent auction.

However, this didn’t stop a great deal of uninformed speculation online as to which brewery they might be interested in. If I were to be asked to add my guess, a couple of names popped out: Beavertown are now dominant in London, and will need financial capital for the expansion they are rumoured to be planning, although they may be able to raise it themselves. FourPure have come on leaps and bounds, receiving my coveted title of Most Improved Brewer for 2016 (http://beerinsider.com/amateur-drinker-awards-for-2016/). In Neck Oil, Gamma Ray, Shapeshifter and JuiceBox, they also both produce superb accessible beers.

I have absolutely no inside knowledge on this and it should be read purely as speculation. Indeed, they are two fantastic breweries, and all I hope is that they carry on being so for as long as possible.

However, it is very likely that it won’t be long before I am writing a piece about a “stunning announcement” of a takeover of a beloved UK brewer…..]

Amateur drinker, serious investor