Bottoms Up

Just  got off the phone with Pyramid CEO Scott Barnum. He said the proposed merger to take Pyramid private will cost Magic Hat and the company’s principal investor Basso Capital Management $25 to $30 million.  The deal, Barnum said includes assumption by Magic Hat of a significant amount of Pyramid debt.

Magic Hat approached Pyramid with the original merger offer, Barnum said.  The deal makes sense; it’s good synergy, he said. Pyramid’s big selles are unfiltered wheat beers; Magic Hat makes interesting and funky ales, including a very good IPA.  The deal gives the merged company national reach, Barnum said, and prepares for the future with its anticipated relentless competition from larger breweries.

But Barnum also believes there are bright skies ahead (my words, not his). The whole craft beer segment is growing rapidly as American tastes switch out of light lager into craft beer. “Obviously, their investor agrees.”

Vision is for Pyramid breweries in Berkeley and Portland to brew Magic Hat beers and perhaps Magic Hat, which has just expanded its brewery in Burlington,  VT to make Pyramid beers.

Pyramid made just over 200,000 barrels of beer last year, ranking it about the 7th largest craft brewer. Magic Hat, which is growing rapidly, made about 100,000 barrels,  and was the 13th largest, Barnum said.  The merger would create one of the largest craft breweries in America.