Whispers of the CANarchy Craft Brewery Collective’s potential sale have circulated through the industry’s rumor mill for the last few years before finally becoming a reality with today’s announced agreement to sell to energy drink maker Monster for $330 million in cash.
Those whispers were the smoke to the fire of the craft brewery rollup being shopped to potential buyers. The seller’s identity though was not be the one everyone associates with CANarchy’s ownership.
CANarchy was built through acquisitions made by Boston private equity firm Fireman Capital Partners starting in 2012 with the Utah Brewers Cooperative (Squatters and Wasatch), followed by Dale’s Pale Ale maker Oskar Blues, Perrin Brewing, Cigar City, and Deep Ellum (Three Weavers was acquired in 2018 too, but founder Lynne Weaver struck a deal to buy back her brewery last year). The acquisition prices of its various components aren’t all clear, although Cigar City, one of its most popular pieces, reportedly sold for $60 million, according to the Denver Post.
With the news of Monster’s $330 million deal for the platform, many pointed to Fireman, the private equity firm they’ve come to know as the brewery’s backer, as the seller. However, the PE firm led by Reebok family scion Dan Fireman ultimately didn’t control CANarchy’s destiny, according to several sources.
Fireman Capital appears to have disappeared from the Internet, save for the archives of the Wayback Machine. The firm appears to have rebranded at some point after mid-2021 as Growcore Investments. Same people, many of the same investments, just a new name. Among those companies listed is CANarchy, although as a past investment.
Several sources told Brewbound that Fireman/Growcore hasn’t controlled CANarchy for a couple of years. Those sources pointed to the platform moving from debt lender Highbridge Capital Management to a spinoff, HPS Investment Partners.
Multiple sources indicated to Brewbound that HPS Investment Partners assumed control of CANarchy’s board from Fireman around July 2020. Then in 2021, a restructuring of the equity ownership occurred, with lender HPS assuming further control of CANarchy. The exact details of the transfer of CANarchy from Fireman to HPS are not entirely clear due to the private nature of the transaction. HPS was ultimately the seller.
HPS declined to comment on the sale. Leaders with CANarchy also declined to comment on the change in ownership structure.
Sources told Brewbound that the $330 million sale price amounted to 9-10x EBITDA and a loss for CANarchy’s owner. While several described the sale price as not the desired outcome of a $400-$500 million sale price, they said this was essentially the best price available for the platform.
The lofty ambitions of the CANarchy platform — which included designs on an initial public offering (IPO) — never came to fruition, although the brewery rollup will become a part of a publicly traded company via Monster, pending approvals.
Monster’s leadership was bullish on its pending acquisition. Monster co-CEO Hilton Schlosberg called the CANarchy acquisition the company’s “best strategy” for entering the bev-alc space during a Thursday afternoon analyst presentation.
Schlosberg and co-CEO Rodney Sacks touted CANarchy’s existing infrastructure, with seven manufacturing facilities, 566 employees, 616,000 barrels of annual beer capacity and 211,000 barrels of seltzer capacity. They noted that CANarchy gives Monster everything it needs to play in bev-alc, with “people, the distribution network, the licenses, the alcoholic beverage development expertise, the manufacturing capability and the infrastructure necessary to grow.”
Those assets will combine with Monster’s wholly owned flavor company, American Fruit and Flavors, which it purchased in 2016, will help with creating new alcoholic beverages, Monster’s co-founders noted.
CANarchy achieved $134 million in estimated net sales in 2021, according to Monster’s leadership.