Belgium’s Duvel invests in another U.S. craft brewer

The non-committal headline says it all: Duvel Moortgat’s latest U.S. investment got everybody’s curiosity piqued: Did they buy Firestone Walker brewery outright (or just a stake) and how much did the Belgians’ fork out? On both accounts Duvel’s owners decided to keep the figures close to their chests.

In July 2015, Duvel Moortgat and California’s Firestone Walker brewery signed an agreement to combine their U.S. operations. The deal will see Duvel making an investment in Firestone Walker, but the Californian brewery will continue to operate independently in Paso Robles under its current leadership of brothers David Walker and Adam Firestone.

Terms of the partnership, which the breweries stopped short of calling a merger or acquisition, were not disclosed, as both companies are privately held. The transaction is expected to close later this year.

The deal will further expand the reach of the Belgian beer conglomerate. Less than two years ago, Duvel purchased Kansas City’s Boulevard Brewing, having acquired the brewery Ommegang in Cooperstown, New York, in 2003.

Founded in 1996, Firestone Walker has grown to become the 16th largest craft brewer in the U.S., best known for its pale ales and pioneering barrel-aged beers.

The trade publication Beer Marketer’s Insights speculated the deal could be valued around USD 250 million. That amount closely mirrors a Wall Street Journal valuation estimate from last November, which pegged craft brewery multiples at USD 1,000 per barrel. By comparison, when Duvel acquired Boulevard Brewing – at the time an 187,000-barrel brewery — it paid an estimated USD 100 million (then EUR 80 million).

U.S. media say that Firestone Walker produced 208,000 barrels beer (243,000 hl) in 2014, up 38 percent from the previous year. The company is projecting another year of growth in 2015, with current production forecasts in the neighbourhood of 272,000 barrels (320,000 hl).

Combined, the two companies are projected to make upwards of 630,000 hl beer in 2015, which would catapult Duvel USA to 7th rank on the Brewers Association’s top-50 craft brewery list. The trade group currently ranks Duvel USA as the 12th largest craft brewer.

Belgian media report that in financial terms, Duvel’s acquisition of Boulevard was a success. The financial statements of the beer group in 2014 show that its revenue last year climbed 29 percent to EUR 256 million. This is mainly due to Boulevard Brewing. But even without Boulevard, Duvel’s sales grew by 11 percent.

Duvel’s operating profit amounted to EUR 63 million (+ 31%) and net profit was EUR 41 million (+ 40.5%).

Having checked Duvel’s financial statements for details, Belgian pundits claim that the Moortgat family, which took the stock-market listed brewer Duvel private in early 2013, paid itself a dividend of EUR 20 million last year. The previous year’s dividend amounted to EUR 16 million. Along with the exceptional dividend of EUR 92.5 million for the year 2012, this adds up to a total of EUR 128.5 million - enough to pay back the EUR 127 million that the Moortgat family borrowed to take Duvel private.

No word though, where the money came from to spend USD 350 million on buying Boulevard and Firestone Walker. But considering that debt is cheap these days, these purchases will soon pay for themselves.

Duvel Moortgat’s beers alongside Duvel include Maredsous, La Chouffe, Liefmans, Vedett, and De Koninck.