In one of the more surprising M&A transactions thus far this year, Lynne Weaver and CANarchy went public Friday with plans for the Three Weavers founder and a group of investors to buy back the Inglewood, California-based craft brewery.
Weaver sold Three Weavers in July 2018 to CANarchy in a transaction that saw Weaver and about a dozen investors exchange equity in the craft brewery for shares of CANarchy. According to a July 2018 U.S. Securities and Exchange Commission filing, CANarchy offered $18,473,301 in equity as part of the merger with Three Weavers.
The story of a founder reacquiring the craft brewery that they started isn’t unprecedented in 2021. The founders of Ninkasi reached a deal with Legacy Breweries last year to reacquire the Eugene, Oregon-based craft brewery. Word of that deal didn’t come out until last month.
Speaking to Brewbound, Weaver said conversations about buying back Three Weavers started in January and culminated in the “asset acquisition,” which includes “everything Three Weavers,” including the intellectual property, equipment and location. Weaver added that she will maintain her equity in CANarchy.
Weaver declined to share who is involved in the investor group, but described them as “a lot of the same folks who have been with me from the very beginning who believe in what I believe.”
That vision includes the construction of a Three Weavers branded brewery, tasting room and restaurant within the Hollywood Park retail district near SoFi Stadium in Inglewood.
Weaver explained that she’d been working on the Hollywood Park project for about four years, an effort she described as a passion project.
“As I went through the process of forming this opportunity, I always had in my head that I can make it whatever I really envisioned,” she said. “But at the end of the day, what felt right was really for it to be Three Weavers. And that came to a head at one point.”
Weaver said CANarchy CEO Tony Short and the team understood the opportunity at Hollywood Park for Three Weavers “but we just couldn’t figure out a way to be able to make this work.”
Those conversations shifted to CANarchy offering the opportunity for Weaver to purchase the brewery that she founded in 2013 in order to pursue the Hollywood Park project. The goal now is to open Three Weavers’ Hollywood Park location by the end of 2022, although it could be as late as March 2023.
“It’s a rare occasion in which you can have that type of partnership-relationship where both sides really value the ultimate success of a brand,” Weaver said. “I have the utmost respect for the guys over there and what they were able to do and teach us during the timeframe, let alone not only get us through the pandemic in California.”
California was one of the most restrictive states in the nation, with stay-at-home orders, on-premise shutdowns and business restrictions that lasted into 2021.
About 50% to 60% of Three Weavers’ volume was sold in the on-premise channel prior to the pandemic. With the abrupt closures, that dried up overnight. Weaver credited the CANarchy sales team with building its off-premise presence during that time and helping the brewery make it to the other side.
“In all honesty, I don’t know if we would have been able to survive that severe of a downturn, and we would have been super laden with debt if we were just trying to survive on our own,” she said.
In an October 2018 episode of the Brewbound Podcast, Weaver said the CANarchy partnership put her company in a better position to weather the “tides and the storms that are maybe coming.” She recalled that conversation on Friday, noting that the pandemic turned out to be “that storm.”
“I thought it was going to be much more of a consolidation bubble kind of thing, not a pandemic,” she said. “Now that we’re coming out on the other side, they’ve shared so much knowledge with us in all honesty that I feel like we were a little bit stronger for it.
“And it’s due to CANarchy,” she continued.
As Three Weavers unwinds from CANarchy, Weaver said she doesn’t expect much of a transition. She said most of the employees will be sticking with Three Weavers, which employs about 16 workers. Alexandra Nowell will continue on as director of brewing operations, while Weaver’s daily work will remain largely unchanged.
Moving forward though, Weaver said the goal now is “steady growth” and going deep in its home market of California.
“My position is much more slow and steady and to build out more important points of contact for consumers to be able to experience our brand and move into this more lifestyle-type of brand, rather than just a brewery,” she said.