Sam Adams Brewer Agrees to Buy Dogfish Head in $300 Million Deal

Employees work on the bottling line at the Dogfish Head Craft Brewery Inc. facility in Milton, Delaware in 2011. C

Photographer: Scott Eells/Bloomberg

Boston Beer Co., the Sam Adams brewer, agreed to buy Dogfish Head Brewery in a deal valued at $300 million, combining two well-known craft beer pioneers in the U.S.

It’s the largest acquisition in the history of Boston Beer, which was founded in 1984 and in recent years has added products like Angry Orchard cider, Twisted Tea and spiked seltzer. But until now, the company hadn’t diversified much in beer beyond the original Sam Adams brand.

The rise of brands like Dogfish, started 23 years ago in Delaware as a tiny craft brewery, have put a dent in the sales of beer-industry leaders like Bud Light and Coors. Now it’s combining with Sam Adams at a time when craft beer, although still growing, has slowed down from its initial boom.

With valuations coming down, Boston Beer saw an opportunity to pounce, according to Chief Executive Officer Dave Burwick.

“We feel like now is the time to fortify and grow our beer business,” the CEO said in an interview. “We’re committed to craft beer for the long term.”

As part of the transaction, Dogfish founder Sam Calagione and his family will get $127 million in Boston Beer stock, becoming the second largest non-institutional shareholders after Jim Koch, the founder of Boston Beer. The deal also includes $173 million in cash that is primarily being used to buy out a stake in Dogfish held by the private equity firm LNK Partners, according to Burwick.

Sam Adams brewer's shares have soared in past two years

Boston Beer’s shares rose 2 percent Thursday in late trading. They had jumped 38% this year through the close.

The purchase will give Boston Beer a bigger presence in IPA and sour beer, two popular styles, the CEO said. The brand Sam Adams has struggled as some drinkers turn away from beer in the U.S. — Americans
drank less alcohol each of the last three years, with the giant light brands leading the decline.

Still, Boston Beer has gotten a boost from its non-beer drinks, including Truly, its brand of hard seltzer.

Dogfish has grown into a top-20 craft brewery, according to the companies. The brand expects to post net sales of about $115 million this year, they said in a statement.