Boston Beer gets a proposal

Is it Heineken or Molson Coors or even Suntory? The rumours about who might bid for Boston Beer have been swirling around Wall Street for a month. Ron Emler reports.

Suntory has denied them while Heineken and Molson Coors have stayed sthoom. But there is a proposal to the brewer of the iconic Samuel Adams brand. It has come from cannabis company Green Thumb.

In a letter to Boston’s founder and chairman Jim Koch, Ben Kovler, the chief executive of Green Thumb Industries, has asked the brewer to consider a merger to create a “powerhouse of brands.”

Drinking less

His logic is that because young consumers are drinking less alcohol, and the cannabis industry is booming, investing in cannabis would be a beneficial long-term move for Boston.

“The equity combination with a U.S. listing [Boston’s] and access to capital sets us both up for a fun future — and one that is bright for America. Our future-back analysis shows Americans with more well-being and less booze,” Kovler wrote.

Boston has not issued a public response to the overture but there is significant legislative hurdle to overcome.

Illegal

Cannabis remains illegal at the Federal level and so offering shares on national exchanges such as Wall Street renders the company involved open to prosecution.

The Biden administration has hinted that it will decriminalise cannabis for recreational purposes but time for doing so is running short before November’s US presidential election.

Boston is already involved with cannabis, having  created a subsidiary to oversee research in to THC beverages in 2021. In 2022, it launched a cannabis infused beverage, TeaPot.

Green Thumb is not listed on a full U.S. stock exchange but its shares can be traded in states where cannabis is legal. The company’s products are available in medicinal and recreational capacities in those states.

Incredibles, its THC-infused treats brand, has grown strongly, including a collaboration with New York City’s Magnolia Bakery on chocolate bars launched last year.

The average price target set by brokers following Green Thumb’s fortunes represents 78.07% increase from the current price of US$11.4.

Same value

At the latest valuations, Green Thumb is worth about US$3.5 billion, roughly the same as Boston.

But while Kovler believes there is huge scope for cannabis within the beverage industry analysts belive it takes only 2% of the overall market. On the other hand, teaming up with Boston might boost brand recognition.

And Boston may care to look over its shoulder at Constellation Brands which invested more than $us$4 billion in Canada’s Canopy Growth.

That proved a major mis-step. Canopy’s fortunes have been on a downward trajectory and Constellation has written off more than a quarter of its stake as well as stepping back from any management function