Pyramid Ales announces acquisition of Portland Brewing Company - Weekly Specialty & Import Beer Report

Modern Brewery Age, Feb 2, 2004

Seattle-based Pyramid Breweries, Inc. has announced it has entered into an agreement to acquire the brewing and brewery-restaurant operations of Portland-based Portland Brewing Company.

In a statement, Pyramid Ales execs said that the deal would create one strong company out of two established regional craft brewers. "In an ever-consolidating beer industry, the move is expected to strengthen Pyramid's future without the necessity of forming alliances with multinational breweries," company execs said. "The combination of Portland Brewing and Pyramid's operations is expected to create the West Coast's third-largest craft brewer. The transaction will bring together key markets and products that complement rather than overlap, and is expected to enable the combined company to secure better distribution and retail presence without relinquishing the small-brewery creativity and spirit for which Pyramid Breweries and Portland Brewing are known."

In the transaction, Pyramid will acquire Portland Brewing's brewery and brewery restaurant assets for total consideration of approximately $4.2 million, consisting of a combination of assumed liabilities, cash and, at Pyramid's sole option, Pyramid common stock. The transaction is subject to approval by the shareholders of Portland Brewing and other closing conditions.

Shareholders representing approximately 74% of Portland Brewing's outstanding voting power are committed to vote in favor of the transaction. The transaction is expected to close late in the first quarter or early in the second quarter of 2004.

The deal brings together two of the pioneering West Coast craft brewers. Pyramid Breweries, founded in 1984, has built a strong position across the West, particularly in Washington and California. Portland Brewing, founded in 1986, is one of Oregon's top five craft brewers.

Pyramid estimates that with the acquisition of Portland Brewing's operations, it will generate estimated annual revenue exceeding $46 million, operating three production breweries and five brewery-restaurants.

Pyramid is recognized for its innovative strategies and broad portfolio of craft beverages. The company operates its brewery-based Pyramid Alehouses for both branding and revenue in Seattle (adjacent Safeco Field), Sacramento, Berkeley and Walnut Creek.

"The craft brewing business is very competitive and changes daily. To stay ahead, breweries must keep moving forward," says Pyramid CEO Martin Kelly. "Some breweries have chosen to go the route of aligning themselves with large, multinational, industrial brewers. We believe that approach can stifle creativity and lead to less choice for consumers. Our approach aligns two independent Northwest breweries and retains the creativity and integrity craft brewers are known for."

Portland Brewing, which operates a brewery and restaurant in Northwest Portland, has had the bumpy ride familiar to many miters. The company reinvented itself in the 1990s with a line of MacTarnahan's ales named after brewery patriarch Robert "Mac" MacTarnahan. The company's MacTarnahan's Amber Ale developed a strong following in Oregon, and the company added MacTarnahan's beers including Black Watch Cream Porter and Highlander Pale Ale.

"This transaction will leverage complementary strengths--the creativity and strong Oregon distribution of Portland Brewing's operations with Pyramid's sales, marketing and distribution resources in Washington and California--to drive the success of both Portland Brewing and Pyramid brands," says Portland Brewing CEO Jerome Chicvara.