Constellation Buying Ballast Point for $1 Billion

FILED NOVEMBER 16, 2015

Dear Client:

So it's Constellation's turn for a big craft purchase: Despite California's fast-growing craft beer and spirits company Ballast Point having started the IPO process recently, news has just come down that Constellation will acquire them for about $1 billion. The transaction will be financed with cash and debt, and is expected to close by the end of calendar year 2015, subject to customary closing conditions.

"The purchase price values the acquisition multiple of the projected calendar 2016 Ballast Point EBITDA in the mid-to-high teens range," per announce.

"We started this business nearly 20 years ago with a vision to produce great beer that consumers love and to do it the right way," said Ballast founder Jack White. "To achieve that vision, we needed to find the right partner. The team at Constellation shares our values, entrepreneurial spirit and passion for beer, and has a proven track record of helping successful premium brands reach the next level of growth and scale."

For their part, Constellation Brands CEO Rob Sands said they "believe in the vision that Jack and his team have created" and are "excited to welcome Ballast Point, one of the most respected craft brewers in the country, to the Constellation Brands family.

"Ballast Point has certainly been a key driver of [premium] growth. Their business philosophy and entrepreneurial spirit perfectly align with our culture and we look forward to strengthening our position in the high-end beer segment with what is arguably the most premium major brand in the entire craft beer business."

STATS. Ballast Point is on pace to sell nearly 4 million cases in calendar 2015, up more than 100%. Net sales for calendar 2015 are expected to approximate $115 million.

Volume and net sales growth from calendar 2012 to calendar 2014 averaged over 80 percent. Ballast Point employs more than 500 employees, produces beer in four facilities in the San Diego, California area, and sells its beer in more than 30 states.

Constellation estimates that on a comparable basis, the acquisition is expected to be neutral to diluted earnings per share for fiscal 2016 and $0.05 to $0.06 accretive for fiscal 2017.

More soon.

Until later, Harry

"Food is an important part of a balanced diet."
- Fran Lebowitz

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