I just learned that Magic Hat has filed a letter of intent to buy Pyramid, a cross-coast merger that will take Pyramid private, and possibly give it some of that Magic Hat magic. Magic Hat's offering $2.75 a share for Pyramid stock, a nice premium over Monday's close of $1.76. Pyramid's board has approved the transaction, as have "certain shareholders" who own about 29% of the company's stock.
“The 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. This consolidation makes both good strategic and financial sense and is well timed, particularly as the beer industry’s competitive dynamics continue to intensify,” said Pyramid CEO Scott Barnum. “The Company will continue to have offices in Seattle, its historical home, and will seek opportunities to capitalize on the enhanced assets and capabilities of the new combined entity,” he added.
Martin Kelly, CEO of Magic Hat said, “We have a great deal of respect for Pyramid’s brand heritage, award-winning beers and its dedicated employees, and look forward to consummating this transaction, which provides both strategic and financial benefits both to Pyramid’s and Magic Hat’s stakeholders.”
The deal is subject to the agreement on a merger transaction, and is expected to be completed by the end of August. It includes the Pyramid and MacTarnahan Alehouses.
Well...as Scott Barnum said, it certainly looks like a complementary merger. There's not a lot of market overlap -- though it's a question whether either company really has the reach to meet in the middle -- and the portfolios should mesh well. People have been murmuring about Magic Hat looking to be bought for years; apparently they preferred to do the buying. My big question is...how come? Why combine a solidly Northwest brewing company with a solidly New England brewing company? Can't be the great success Redhook has had with their New England expedition. I would suspect it's more a craft-based case of the consolidation fear that's gripping the world's big brewers: pair up and get large now, before all the good partners are gone and you're left as an also-ran.