Terrapin Sells Minority Stake to MillerCoors

By Jim Cohen | October 18, 2011 | 0 Comments |
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Craft breweries are fast-growing and innovate. It makes sense that investors and megabreweries want a piece of the action. Earlier this year, Anheuser-Busch InBev acquired leading craft brewery Goose Island. Last year, we saw the sale of Magic Hat and Anchor Steam. MillerCoors, the joint venture between SABMiller and Molson Coors, didn’t want to miss out either – they just acquired a piece of Terrapin Beer Co.

The deal will represent a minority equity position (less than 25%) for Tenth & Blake, which is the “craft” brewing division of MillerCoors. What was the motive? Apparently, John Cochran, President of Terrapin Beer Co. sent a note to employees on October 5th highlighting the rapid disagreement in the future vision of the brewery between the management team and original investors. They took a loan from Tenth & Blake to buy out the original investors.

“During the loan discussions, it became clear that we and the Tenth & Blake leaders shared a common view of the long-term potential of Terrapin. Those conversations have now led to Spike and I inviting Tenth & Blake to convert a portion of its already existing loan to a minority stake. This allows Terrapin to significantly reduce our debt burden and enables us to invest more intensely in production capacity and innovation,” Cochran said.

So to recap – in December 2010, Terrapin took a loan from Tenth & Blake to buy out the original investors. Thereafter, in order to reduce their debt burden they converted Tenth & Blake’s loan to an equity position, which will free up cash and the brewery’s financial limitations.

With a reduced debt burden, Terrapin will be able to expand. In fact they want to invest $4 million in an expansion that will double the capacity of the brewery to 45,000 barrels. The brewery had a difficult time expanding (even though there was demand) beyond their regional market, which is primarily the Southeast.

Do you think Cochran and the folks at Terrapin sold out to the big breweries?

“Those people just need to hear the full story,” Cochran told the Athens Banner-Herald. “Nothing changes for us. We’re still in control to decide what beers we’ll make and when to make them. In a way, it allows Terrapin to become more of a craft beer company than we have been because it allows us to do things we couldn’t do before.”

Well, this certainly limits the number of buyers that Terrapin could have in the future (MillerCoors is the obvious choice since they’ll own some of the company). What do you think? What does this mean for Terrapin?

Your Choice. Your Beer. Drink Up.
- Beer Universe



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