Three years later, Boston Beer (SAM) has finally been paid off for a voluntary product recall taken in April 2008. As noted in the company’s 10-K from this year, “The recall was a precautionary step and resulted from routine quality control inspections at the Cincinnati Brewery, which detected glass inclusions in certain bottles of beer. The bottles were from a single glass plant that supplied bottles to the Company. The glass plant in question supplied approximately 25% of the Company’s glass bottles during the first quarter of 2008.” The company had recorded costs associated with the recall of nearly $10 million in 2008, which cut net income in half; shares were up nearly 3% for the day on the positive news.
Today, the company reported that they have “entered into an agreement to settle all claims regarding the recall implemented by the Boston Beer Company in 2008. The Boston Beer Company will receive payment of $20.5 million, and all parties will release each other on any claims as they relate to this matter.” For Boston Beer shareholders, it was nice to see this come to an end; a positive result with the High Falls brewery litigation (which started in 2009) would be an added bonus to the company’s coffers.
As of March 26, the company had roughly $45 million in cash, and no debt on the balance sheet. After adding in today’s payoff, the company is sitting with more than $65 million in cash, or right around $5 per share in cash. I would be interested in seeing the company’s plan for the cash; while someone at AB InBev (BUD) or Molson Coors (TAP) would be interested in building a strong position in craft with a brand like Sam Adams, I highly doubt that the deal would ever go through. Sam Koch, CEO of Boston Beer, holds 100% of the Class B shares (the voting stock), and likely has no interest in selling out on his vision of brewing great beer for the masses (money’s not an issue, considering the millions worth of stock he already owns).
How about an acquisition from Boston Beer? Anheuser-Busch InBev NV (BUD, Financial) purchased craft brewer Goose Island in March for $39 million from Craft Brewer Alliance (HOOK). The big guys are looking to step in and fight for craft share; is it time for Boston Beer to consider adding to the portfolio outside of the company’s core brands? With millions in cash, zero debt, and 1,800 craft brewers in the United States, Boston Beer has plenty of options if they are interested in expanding their offerings outside of Samuel Adams.
Today, the company reported that they have “entered into an agreement to settle all claims regarding the recall implemented by the Boston Beer Company in 2008. The Boston Beer Company will receive payment of $20.5 million, and all parties will release each other on any claims as they relate to this matter.” For Boston Beer shareholders, it was nice to see this come to an end; a positive result with the High Falls brewery litigation (which started in 2009) would be an added bonus to the company’s coffers.
As of March 26, the company had roughly $45 million in cash, and no debt on the balance sheet. After adding in today’s payoff, the company is sitting with more than $65 million in cash, or right around $5 per share in cash. I would be interested in seeing the company’s plan for the cash; while someone at AB InBev (BUD) or Molson Coors (TAP) would be interested in building a strong position in craft with a brand like Sam Adams, I highly doubt that the deal would ever go through. Sam Koch, CEO of Boston Beer, holds 100% of the Class B shares (the voting stock), and likely has no interest in selling out on his vision of brewing great beer for the masses (money’s not an issue, considering the millions worth of stock he already owns).
How about an acquisition from Boston Beer? Anheuser-Busch InBev NV (BUD, Financial) purchased craft brewer Goose Island in March for $39 million from Craft Brewer Alliance (HOOK). The big guys are looking to step in and fight for craft share; is it time for Boston Beer to consider adding to the portfolio outside of the company’s core brands? With millions in cash, zero debt, and 1,800 craft brewers in the United States, Boston Beer has plenty of options if they are interested in expanding their offerings outside of Samuel Adams.
