ALERT: Pabst On Deck to Sell to C. Dean Metropoulos

FILED MAY 24, 2010

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Standard & Poors reports that Pabst is "on deck" with a $100 million M&A loan as the brewer has finally found a buyer. Former Pinnacle Foods Group chief and Wall Streeter C. Dean Metropoulos is set to close on the virtual brewer. He has secured a loan from GE Capital for $100 million, accoring to S&P sources. GE Cap will launch a syndicate of the loan, likely on Wednesday in Chicago. It's a $10 million revolver and $90 million in term loan.

So who is C. Dean Metropoulos? Metropoulos, 62, is the former chairman and chief executive officer of New Jersey-based Pinnacle Foods, which is the parent company of food brands such as Duncan Hines, Armour, Vlasic and Mrs. Paul's. Metropoulos sold Pinnacle last year for more than $2 billion. He is reportedly a billionaire who is outgoing and charming. He was a former banker with ABI fave banker Hicks, Muse, Tate & Furst.

Forbes describes him as somebody who can fire off "the most minute details of Alexander the Great's life, from the name of his white stallion (Bucephalus) to the number of wounds he suffered in combat (27). But what he identifies with most is Alexander's military strategy--relying on small, agile armies to outmaneuver enemies of far greater size."

He is the son of a Greek village farmer. He was the right-hand man of Dallas buyout firm Hicks, Muse, Tate & Furst, and had led a string of small to mid-size companies to returns in CPG companies "well above those of industry giants like Campbell Soup, H.J. Heinz and ConAgra," says Forbes.

He is "adept at revitalizing neglected brands like Chef Boyardee canned pasta, Pam cooking spray and Dennison's canned chili--and for getting shelf-space mileage out of stronger brands like Bumble Bee canned tuna. 'I look at all kinds of acquisitions, but I narrow it all down to the strength of the businesses I am already in,' Metropoulos says to Forbes. Sounds like the right man for the job. We'll have more on this development later.....


MORE ON A-B MEETINGS

"I give them props for reaching out and communicating, but....." That's how many emails from A-B distributors started out today regarding A-B's attempt to calm the restless natives and give clarity on where they stand on several issues looming out there. The series of meetings, which were held regionally and at the urging of the Wholesaler Panel, also put North American zone president Luiz Edmond front and center for wholesalers in a big way. The main thrust of the meetings, we're told, was to reiterate their support of their distributors, support for the three-tier system, and to facilitate better communication between the brewer and its distributors.

Wholesalers thought that Luiz and Dave Peacock did a good job of "restoring confidence and creating a better atmosphere of candid communication," as one distributor put it. "I think this was their goal so they succeeded." Some meetings were fiery than others during the Q&A, particularly the one held in San Fransisco, which isn't surprising given A-B's trends in that region.

One of the issues wholesalers repeatedly brought up was the Care Act, and why A-B is so opposed to its passage. A-B brass said that it threatens their ability to market beer nationally, and that the Care Act changes the status quo, while A-B is merely reacting to the threat of changing the status quo. Dave and Luiz also said, we're told, that the Care Act over-reaches a little and yet the NBWA so far hasn't moved.

But as one distributor put it, "The continued lawsuits attacking the three tier system threaten the status quo, the CARE Act would help to maintain the status quo." Another distributor says that A-B "cannot articulate their opposition except to say mumbo jumbo on the advertising restrictions which I think is a smoke screen.....After all we have dry counties scattered throughout the US and a state could pass those restrictions today and the CARE Act doesn't prohibit it." Another distributor reportedly said at a meeting that the billion dollar bonus ABI execs will get if they reach their goals is fine, just "throw us a biscuit" and back off the Care Act and give distributors a little sense of security.

On Chicago and Louisiana, A-B again reiterated that they simply wish to keep the status quo, as they've been able to hold licenses there for years. The branch policy, says A-B, remains the same. Distributors either bought that or didn't. The phrasing I heard the most was: "Actions speak louder than words," so time will tell.

OUR TAKE. Changing a distributor relationship is tough. Adami found that out, and SAB's culture was no where near as far from distributors as ABI's was. It's weird, because in some ways A-B and MillerCoors are switching sides with regard to distributor strategy. When N. American zone president Luiz Edmond says, in effect, "you run your business and we'll run ours," that's a very different dynamic from when the Busch's were in charge. The Busch's would say, "We'll run our company, and then we'll run yours." MillerCoors, on the other hand, is taking a more proactive role in their distributors, as seen by their latest contract. So once again we find ourselves in a topsy turvy beer industry.

Regarding A-B expanding its branches, it's tough to tease out their real intentions. On one hand, A-B typically only has branches in large markets that would be barely profitable for an independent operator, or even unprofitable. New York, Miami, Los Angeles, and Hawaii are marginally profitable, if at all. Chicago is also a tough market (made moreso by their comparatively low market share), as is New Orleans (where A-B is fighting to be allowed to have a stake in wholesalers if they so choose). So on one hand A-B is keeping to their longtime strategy of having branches where they feel they absolutely need them, and leaving independent operators in markets where they don't. A-B recently sold back stakes in distributorships in Iowa (to the Doll family) and in New York State (Albany to the Vukelic family), which seems to bear that out. Besides, state laws are strong and varied, and I think any wholesale changes across the board would be difficult, expensive, time consuming, and ultimately in most cases, unsuccessful.

However, there is that tingling in the back of people's mind that, with the ability to own a branch, also comes the ability to ship direct to chains, cut a distribution alliance with Pepsi bottlers, etc., that continues to worry distributors, given Brito's "50% of volume" and "for now" comments. It basically all comes down to trust. And there seems to be some undercurrents out there of distrust.

As one distributor put it, summing it up: "The problems are still a threat. However, just knowing they are listening helps."


SPECULATION THAT FOSTER'S COULD SOON SELL BEER UNIT

Here we go again. Since Trevor O'Hoy stepped down in 2008, there's been speculation on and off that Foster's was on the verge of selling either its beer or wine unit. Today there were some rumblings in the Australian press that Foster's Group could soon sell its beer business. That's because the company is looking stronger than it has in some time. Its market value is A$9.9 billion and the Australian dollar is starting to fall, which means the timing could be right for a global brewer to make an offer. If that were to happen, it could force the company to demerge its beer and wine businesses earlier than planned.

At Foster's half year results, chief Ian Johnston kept mum: "At this time my intent is for the management to focus on maximizing performance and appropriately positioning the businesses for retaining full optionality for the company at a future date. We will of course continue to evaluate all structural options...."


Until tomorrow, Harry

"It is the soothing thing about history that it does repeat itself."
-Gertrude Stein

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