BrewDog puts itself up for sale

United Kingdom | The producer of Punk IPA and Elvis Juice has called in advisers AlixPartners to run a restructuring process that could prompt the break-up of one of Scotland's best-known consumer businesses, media reported on 14 February. Allegedly, AlixPartners has already begun to sound out prospective suitors and set a quickfire deadline for indicative offers. All this smacks of a distress-driven auction.

The setup is clear. The company is in administration (not officially, though) and its largest private equity backer, TSG Consumer Partners, has already extended a GBP 20 million (USD 27 million) loan to keep operations afloat.

Founded in 2007 by James Watt and Martin Dickie, the firm was at the forefront of the UK’s craft brewing boom before it ran into reputational difficulties, citing a “challenging economic climate” and “sustained macro headwinds”. In a statement it said it had called in the restructuring specialist to plot its “next phase of investment”.

BrewDog could be broken up

A person with knowledge of the situation told the Financial Times that the process involves BrewDog’s three business areas: its brands, its brewing capacity and its pub estate. This raises the distinct possibility of a break-up sale. The brands and the retail estate of 72 bars (there were once more than 100) could attract bids from leading leisure operators. Whether its four breweries – in Scotland, the US, Australia and Germany – will find a single buyer or will go to several bidders, remains to be seen. The company currently employs around 1400 people.

BrewDog’s valuation is anybody’s guess. The firm reported a pre-tax loss of GBP 36.7 million (USD 50 million) on a turnover of GBP 357 million in 2024, followed by workforce reductions, bar closures, and the shutdown of its distillery.

Between 2009 and 2021, BrewDog conducted seven major “Equity for Punks” crowdfunding rounds and managed to raise approximately GBP 75 million (USD 100 million) from roughly 220,000 “Equity Punks”. A sale could leave its small investors with little to nothing. Mr Watt’s stake and a promised GBP 100 million stock gift, made to employees in 2022, also appear valueless. That is because the terms of the 2017 investment by private equity firm TSG Consumer Partners (which acquired a 22.3 percent stake) included an 18 percent compounding annual coupon that has so far earned TSG a total of more than GBP 800 million, which BrewDog now owes. This means that TSG is entitled to a massive return on any sale before small shareholders see a penny.

Co-founder James Watt, who remains one of BrewDog's biggest shareholders with a 24 percent stake, is now reportedly considering a bid to buy the company back, canvassing support from financial backers. However, any such bid would face intense scrutiny. Mr Watt’s tenure as CEO was plagued by allegations of a "toxic" workplace culture and personal misconduct, claims he has consistently denied but which significantly tarnished the brand’s image.