After weeks of anticipation, Maui Brewing is officially moving forward with its acquisition of San Diego’s Modern Times Beer.
The fate of Modern Times has been uncertain since the brewery announced earlier this month that BX MT BAMF LLC – an affiliate of Anaheim, California-based Brewery X, named the winning bidder in the June auction of Modern Times – had “elected not to complete the sale process.” Although Maui was next in line to acquire Modern Times as the court-approved backup bidder, there was no guarantee the Kihei, Hawaii-based craft brewery would follow through with the acquisition.
“Given the surprising outcome of the auction, Maui Brewing Company was prudent in its decision to move forward, taking appropriate measures to evaluate and solidify details prior to the announcement for the sake of both the Modern Times and Maui Brewing teams,” Maui said in a press release.
The sale is expected to close by late October. Neither Maui nor Modern Times shared a final sale price. However, Maui’s backup bid was accepted at $15.3 million during last month’s auction. Brewery X’s winning bid was recognized at $20 million, and was supposed to close by July 8.
“The delays were painful for all,” Garrett Marrero, Maui co-founder and CEO, said in the release. “However, it was important that we waited until we had made concrete decisions to avoid any further emotional whiplash for our collective teams.”
Maui is on track to produce 90,000 barrels in 2022, aided by a partnership with Denver-based Sleeping Giant Brewing Company, which now brews all of Maui bev-alc offerings distributed on the mainland. Sleeping Giant started producing hard seltzer for Maui in November 2021, and added beer production for the company in early 2022.
While the purchase of Modern Times will “not provide immediate capacity” for all of Maui’s “mainland needs,” it will allow for “future capacity,” Maui said in the release. Together, Maui and Modern Times are projected to produce 125,000 barrels this year, which would make the joint entity the 21st largest craft brewery by volume in the U.S., according to Maui, citing the Brewers Association.
For Modern Times, Maui said the company “can and will return as a highly successful and profitable brand.”
“Maui Brewing and Modern Times are both distinctive in brand story,” Modern Times CEO Jennifer Briggs said in the release. “And what is most interesting and compelling is what we have in common – a sense of community, a commitment to a holistic mission for growth, a passion for brewing, and the taste, flavor, and experience we share with our patrons. The excitement for what this can mean for a shared future is palpable.
“This has been an uncommon situation in the way we’ve lived it out publicly, and now we have the opportunity to be methodical in opening the next chapter,” she continued. “And, damn, that chapter will be exciting!”
The Modern Times ownership tale had many twists and turns in the past year, which started in February when the company announced it would close its taprooms in Portland, Oregon; and Oakland, Santa Barbara, and Los Angeles, California. That was followed by the April revelation that it would enter a court-ordered receivership and sale process, after defaulting on several loans from its primary lender, Zions Bancorporation (California Bank & Trust).
Maui entered the story in May, when the brewery’s stalking horse bid of $7.62 million was accepted by Modern Times’ receiver, Thomas C. Hebrank, setting the bar for overbids. An auction then played out on June 17, between Maui, Brewery X, and MTD Asset Acquisition.
MTD’s president is listed as K. Bagby Taylor, and the bidder was referred to in court documents as North Carolina brewery TRU Colors. Kurt Bagby Taylor is the founder of Next Glass – the parent company of Untapped, BeerAdvocate and Hop Culture – which he exited in March 2020. Taylor’s father, George Taylor, is the CEO of TRU Colors. However, Kurt Taylor told WilmingtonBiz there is no connection between any of the companies and MTD, or the attempt to purchase Modern Times.
MTD had the highest bid recorded at the closing of the auction for Modern Times at $20.1 million, with a 120-day closing window. However, Brewery X was selected as the winning bidder at $20 million, with a 14-day closing window. MTD filed an objection to the sale and submitted a new bid of $21 million, claiming priority was given to Brewery’s X’s bid due to its shorter closing period, despite what MTD believed were previous guarantees by Hebrank that such conditions would not be weighted when choosing a winner.
Two declarations in support of MTD’s objection were also filed, which included partial auction transcripts that detailed heated discussion between representatives for MTD and Brewery X, and Hebrank.
MTD’s final auction bid also included a request for a Chapter 11 bankruptcy filing. In Hebrank’s post-auction declaration, he wrote that the Chapter 11 factor, “among others” in MTD’s offer, “increased risks” for the sale “compared to the BX MT bid.”
Following Hebrank’s decision on the auction winner, MTD was offered the position as backup bidder, but the company declined the position. The backup bidder spot went to Maui’s $15.3 million bid, according to court documents filed by Hebrank in the Orange County Superior Court of California.
On June 24, Judge John Gastelum signed and filed an order approving the auction sale of Modern Times to Brewery X. In the filing, the judge noted that “all objections to the auction, sale and the sale process, if any, have been considered by the court and are overruled.” Per the sale order, Brewery X was to hand over $20 million in cash by July 8. However, the brewery backed out of the sale on July 1 – an “unexpected development” described by Briggs as “abrupt.”