Energy drink maker Monster Beverage has reached “a definitive agreement” to acquire the CANarchy Craft Brewery Collective for $330 million in cash, the company announced today.
The all cash deal is expected to close in the first quarter of 2022, pending “customary closing conditions, including regulatory approvals.”
The acquisition will give Monster a foothold in the beverage alcohol space that it has long toyed with and a top 10 craft beer producer.
“This transaction provides us with a springboard from which to enter the alcoholic beverage sector,” Monster’s vice chairman and co-CEO Hilton Schlosberg said in the release. “The acquisition will provide us with a fully in-place infrastructure, including people, distribution and licenses, along with alcoholic beverage development expertise and manufacturing capabilities in this industry.”
“The addition of CANarchy and its brands to the Monster beverage portfolio represents an excellent opportunity to further grow our already robust product offerings,” Monster chairman and co-CEO Rodney Sacks added. “We are excited to build and expand upon CANarchy’s existing brands with innovative new products.”
As part of the transaction, Monster will take on craft beer brands Cigar City (Jai Alai IPA and Florida Man IPA), Oskar Blues (Dale’s Pale Ale and Wild Basin Hard Seltzer), Deep Ellum (Dallas Blonde and Deep Ellum IPA), Perrin Brewing (Black Ale), Squatters (Hop Rising Double IPA and Juicy IPA) and Wasatch (Apricot Hefeweizen).
In a press release, Monster noted that its organizational structure for its energy drink business will remain unchanged. CANarchy, once in the fold, “will function independent, retaining its own organizational structure and team, led by Tony Short.”
Short said CANarchy’s team “is thrilled’ to join Monster.
“We look forward to capitalizing on the combined expertise of Monster and CANarchy to further strengthen our current alcoholic product offerings, expand our product portfolio to meet the ever changing needs of our customers and to grow our business.”
CANarchy’s brands produced 489,626 barrels of beer in 2020, an increase of +2% from 2019, according to the most recent data available from the Brewers Association. The $330 million purchase price translates to $673.98 per barrel.
The notion of Monster entering the alcohol industry has been hinted at for the last couple of years. In November, Bloomberg reported on discussions of a potential deal between Monster and Constellation Brands, the parent company of Corona, Modelo and Pacifico for the U.S. market, which also produces many wine and spirits brands.
Financial services firm Jefferies web sleuthed several job posts over the last year that point to Monster “prudently building expertise in the alc space, incl. alc strategy (innovation) and regulatory affairs *bev alc. experience ‘a must.’).”
Monster’s interest in alcoholic beverages — particularly, hard seltzer — has been a topic of discussion since June 2019, but 2020 and 2021 went by without the introduction of a product. Nevertheless, Monster’s interest remains alive, as the job posts discovered by Jefferies shows.
Among the positions advertised included:
- A manager of alcohol strategy and innovation, who would be tasked with working with Monster’s innovation and executive leadership “on a new product strategy to create compelling and differentiated alcoholic products;”
- A trade marketing manager, who would be in charge of “campaigns for all channel customers with distributor’s sales planning and trade marketing department … with wine and spirits experience a big plus;”
- And regulatory affairs for North America, with the hire joining a team focused on “innovation … and will also be responsible for compliance activities related to other product categories than energy, such as alcoholic beverages … regulatory experience in alcoholic beverage industry a must.”
Under Monster ownership, CANarchy will still be considered a craft brewery by the BA’s definition. CANarchy is the second top 10 craft brewer to transact in recent months, following the acquisition of Bell’s Brewery by Kirin-owned Lion Little World Beverages.
Evercore served as a financial advisor on the deal, with Jones day serving as legal advisor to Monster. Latham & Watkins served as legal advisor to CANarchy.
The deal does not include CANarchy’s stand-alone restaurants.
Editor’s note: this story was updated at 10:50 a.m. to correct a mathematical error in the per barrel valuation of the sale.
Thursday, January 13 2:05 p.m. ET: This story was corrected to note that CANarchy will remain a craft brewery under the Brewers Association definition.