Stocks That Won’t Exist in a Decade: Craft Brew Alliance (BREW)
The Way Out: Buyout
In August, Craft Brew Alliance Inc (NASDAQ:BREW) signed an agreement with Anheuser Busch Inbev NV (ADR) (NYSE:BUD) that seemed to signal an eventual acquisition. BREW stock soared to over $22 in the days following the announcement, one that clearly incentivized A-B to buy the ~70% of BREW stock it didn’t already own.
Investor patience has waned ever since, however. CBA has struggled with sales of its legacy craft beers like Redhook and Widmer Brothers, which have been displaced by local options outside their Northwest base. And the company simply hasn’t figured out a way to drive consistent profits.
Still, a sale of BREW seems likely at some point — and Anheuser Busch still seems the most likely acquirer. CBA’s Kona brand continues to post double-digit growth, and sales of other brands like Lagunitas and Ballast Point imply substantial upside from current levels. Like AMC Networks and National Beverage, Craft Brew Alliance simply lacks the scale to compete in the current market environment.
That’s a dangerous place to be. And it’s a place companies generally look to exit as soon as possible.