Is Bells Brewery for Sale? Maybe.

By Chad Pilbeam | May 2, 2012 | 0 Comments |
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The beer wars, buyouts, and consolidation of breweries continue to headline the industry, despite the record number of new breweries opening that send the message of prosperity and goodwill to all who enjoy great beer.  But not all of these wars and buyouts are being fought by the “big two” who seek world domination – no, there are other battles that wage on, as seen with the nation’s 7th largest craft brewery (who also holds the title of 13th largest brewery).

As of today the future of Bell’s Brewery is unknown, but as early as this fall, the decision to sell may be inevitable depending on the negotiations between founder and president Larry Bell and several minority shareholders.

The majority of the company is owned by the Bell family which consists of Bell and his two children, Laura and David, but that may not be enough to keep the company in the family.  For years Bell has been attempting to buy out minority shareholders in an attempt to gain control over the destiny which seems to be up in the air.  Most recently, Bell spent over $100,000 in legal fees to make an offer to minority owners – it didn’t have the response he expected.  Another shareholder meeting is expected next month, where discussions of a buyout are expected to continue.

In 2010 (the company’s 25th anniversary), Bells spent $22 million expanding the brewhouse and renovating their Eccentric Café.  Since, the rest of the $52 million expansion project was put on hold as the company seeks to use the saving to buy out 11 of the 14 shareholders, according to Bell.

Over the years, Bell’s relationship with investors has been “bumpy”.  If buyout attempts are unsuccessful, Bell said “It would basically leave us in the position of selling the company upon my death.”  Despite his best efforts to keep the brewery in the family, Bell has not ruled out selling his shares in the company if a resolution cannot be met. 

So just how “bumpy” has the relationship between owner and investor been?  In 2007 some of the company’s current and former shareholders filed a lawsuit against Bell.  According to the court records, the plaintiffs allege that in 2005 “defendant Bell began to execute a plan designed to reduce the number of shareholders and increase his own percentage of ownership in Bell’s Brewery.  Defendant Bell threatened various actions including suppressing company growth and simultaneously threatening the defendant, Bell’s Brewery, will lack resources to pay shareholders in the future.”

The document also said “Bell forced, encouraged and/or persuaded shareholders… to redeem stock at a price established by defendant Bell.”

Eventually the plaintiffs settled with Bell out of court and the lawsuit was dismissed in November, 2008.  The terms of the settlement are not known.

Bell has never seriously discussed selling the brewery, which produced more than 180,000 barrels last year, but knows that there are private equity companies and large breweries interested should the opportunity arise (the brewery is expected to grow by more than 28% this year).  Bell said, “I don’t want to sell, but it’s a great time to sell if I had to.  There are many willing buyers.”

“Our goal is to make this thing economically sustainable for generations,” said Bell. “That may not be the goal of everyone in the company.”

Bell admits that the stress keeps him up at night and the thought of selling is heartbreaking, but he has to look at this realistically.  As such, he has stopped new investments in the company including plans for a canning line and new brewhouse, and ended some of the company’s philanthropic efforts, all in an effort to make another offer to shareholders.

Fans of the Michigan-based brewery and Bells’ beers are already voicing their concern over the rumors of a sale.  What about you?  Could we see another buyout to the likes of Goose Island?  Will there be a consolidation with other craft brewers in the area to form an “alliance”? 

No doubt, the Beer Wars wage on, and to the victor go the spoils.  Let’s just hope the winner preserves the integrity of the beer for the sake of those of us who slake their thirst with the likes of Expedition Stout, Porter, and of course Two Hearted Ale.

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

Chad Pilbeam is a staff writer for Beer Universe, you can follow him @beernbullcbo.

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