According to their 2016 brewing and distribution renewal agreement, Friday marks the deadline for AB InBev (BUD) to make a qualifying offer for Craft Brew Alliance (BREW) at a locked-in price of $24.50.
QUALIFYING OFFER DEADLINE: Back in 2016, AB InBev partnered with Craft Brew Alliance and was given a deadline of August 23rd of this year to make a qualifying offer. The 2016 brewing and distribution renewal agreement, filed with the U.S. Securities and Exchange Commission, stated that AB InBev had a contractually locked-in price of $24.50 per share for the publicly traded company through August 2019, which would amount to about $476M. If AB InBev decides otherwise, the company will have to pay Craft Brew $20M.
Companies already under the Craft Brew Alliance umbrella include Washington State's Redhook Brewery, Oregon's Widmer Brothers Brewery, Hawaii's Kona Brewing, as well as gluten-free Omission Brewing and Square Mile Cider.
BUY ON REVENUE ACCELERATION, OFFER DEADLINE: Back in May, Maxim analyst Anthony Vendetti assumed coverage of Craft Brew Alliance with a Buy rating and a price target of $21, saying he expects the company's revenue to accelerate in 2019 thanks mostly to the increased marketing for its flagship Kona brand. The analyst also cited Craft Brew's relationship with InBev and pointed to its option to make a qualifying acquisition offer at $24.50 per share by August 23rd.
PRICE ACTION: In afternoon trading, shares of Craft Brew Alliance are fractionally down to $12.74.
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