NEW YORK (
is angling to acquire to
Craft Brewers Alliance
, according to readers of
whether Anheuser-Busch sees long-term potential in Craft's growing corner of the niche craft beer market, or if the beer behemoth wouldn't bother with such a small-time player in the market. Voters overwhelmingly agreed that Anheuser-Busch is looking to acquire Craft Brewers Alliance.
Out of 480 votes, 84.6% of the cast ballots voted yes, while just 15.4% voted no.
As craft and artisanal beer consumption gains momentum in the U.S. --
from the likes of industry titans Anheuser-Busch,
Molson Coors Brewing
in the process -- there has been speculation that Anheuser-Busch would make a buyout offer for Craft.
The rumor mill was further churned when, in Craft's recent quarterly report, the collection of regional breweries reported
. Craft paid $5.8 million to Anheuser-Busch last year under the agreement, and $3 million in the first half of 2010. In its filing with the SEC, it said that Anheuser-Busch agreed to reduce that fee by nearly 30% which will result in additional annual top-line savings of $1.6 million. Craft said it expects to reinvest all of the savings from those fees into the development, marketing and support of its brands.
That little tidbit of information buried on page 24 of the filing was the report's key piece of news, according to Bryce Peterson, founder and president of
Washington Street Investments
Peterson said takeover speculation is premature, but conceded the Budweiser brewer "might think it's smart to buy a strong brand in the craft area and use its incredible distribution and marketing strengths to grow the acquired business."
Washington Street owns about 2.5% of Craft.
"Boils down to BUD agreeing to fund a marketing campaign for HOOK," Peterson explained.
In other words, Anheuser-Busch agreed to effectively finance a marketing campaign for Craft (through the distribution agreement change) because it sees long-term and even national growth potential in at least two of its beer offerings, namely Widmer Drifter and Kona Longboard Island Lager, and could benefit in the long run if Craft's value, and the value of the beer brands it produces, increases.
Anheuser-Busch owned more than 6 million shares, or 35.5%, of Craft, according to an August 12 filing with the SEC.
Jay R. Brooks, beer columnist for
Bay Area Newsgroup
, insisted "no niche is too small for
Anheuser-Busch to put their fingers in," citing numerous occasions when the multinational company tried -- and often succeeded -- in dominating a particular beer category like organic or gluten-free varieties.
Even so, he didn't see what benefit Anheuser-Busch would gain by acquiring the remaining shares of Craft it does not already own. With the distribution relationship already in place, Anheuser-Busch's network of distributors already carry Craft's popular and growing brands of beers.
"Anheuser-Busch may be angling to acquire Craft but perhaps not to actually acquire it," he said. "Why spend the money? They already have the advantage they need."
Wide stock price movement of Craft's shares in recent weeks,
, suggested someone has been trying to accumulate the stock in anticipation of a takeover. The stock hit a 12-year high of $6.70 on Monday.
Craft executives filed several reports about insider trading last week. Craft's CFO and treasurer, Mark Moreland, purchased 6,000 HOOK shares over the course of two days, paying $5.94 a piece for half of them and $6.26 per share for the remainder, for a total purchase price of $36,600. That brought his holdings to 12,400 HOOK shares, or 7.2% of the 17.11 million shares outstanding. Independent Director David R. Lord bought up 1,627 shares at $6.21 a piece for $10,103 last week, while John D. Rogers Jr., listed as another independent director, sold 3,000 shares at $6.27 per share for $18,810.
"Insiders sell for multiple reasons, but typically only buy for one of two reasons," Peterson said. "They expect the stock price to rise, or, in some company-specific cases, they're contractually required to own X-amount of company shares, so they're buying to meet that requirement. Right or wrong, when the CFO -- the numbers guy -- buys, people listen."
Peterson thinks the idea of Anheuser-Busch acquiring Craft Brewers is premature. "The BUD ownership combined with the distribution agreement change is the headline-catching "sizzle," but the longer-term potential of the brands is what excites us."
"The company has performed better than I imagined, especially from a gross margin perspective, and the Kona acquisition plus distribution agreement change are major positives," said Peterson, who began buying HOOK shares early this year when they traded in the $2.40 to $2.70 range.
Even trading upwards of $6, Craft's shares "are still attractively valued," he said.
--Written by Miriam Marcus Reimer in New York.
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