Magic Hat And Pyramid Intend to Merge


This information is hot of the press (posted by BA yesterday). I held onto the previous Magic Hat Expansion post and when this news appeared yesterday — I decided to share these together. (The expansion update was an article from about 2-3 weeks ago.)

I am curious if Magic Hat will continue with their full expansion plans. I assume that they will, but this joint venture with Pyramid is the next step towards world domination. Might they cut back to increase their cash flow?

With breweries on each coast, Magic Pyramid will be able to bring fresh beer to a wider customer base(note: Magic Pyramid is a fictitious, but fun name.) Will recipes be shared? Will Pyramid try the infamous Ringwood yeast? Many questions, but this can be worked out over a pint or two.

It is true that time will only tell how this merger works out. I have visited the Magic Hat Brewery and it’s no surprise that it is located in Vermont. They have created a fun, anti-corporate mentality. With fun names (such as Minister of Fermentation Elation Relations and High Priestess of Peddling), customer appreciation cookouts, dog washing day and other non traditional things — Magic Hat pushes the traditional corporate boundaries. From the outside, it appears to be a fun place to work. Will this mash with the Pyramid Environment?

I am not surprised to hear of this announcement. Do you remember this post?

Pyramid Breweries stock dives 23 percent

… the company reported a fourth-quarter loss of $1.8 million, or a loss of 20 cents a share, compared with a loss of $1.2 million, or a loss of 14 cents per share in 2006….

I actually thought about making a personal investment. With this announcement, it encourages me even more.



Drink Craft Beer, You’ve Earned It!!

Magic Hat And Pyramid Intend to Merge

SEATTLE & SOUTH BURLINGTON, Vt. (April 2008) – Pyramid Breweries Inc. (NASDAQ: PMID) (“Pyramid”) and Magic Hat Brewing Company & Performing Arts Center, Inc. (“Magic Hat”) today announced the execution of a Letter of Intent (“Letter of Intent”), which contemplates a transaction by which Magic Hat will acquire Pyramid, through an agreed all-cash tender offer and subsequent merger, at $2.75 per share of Pyramid common stock on a fully-diluted basis.

The proposed transaction is subject to the negotiation and execution of a definitive merger agreement. The merger agreement will provide for a first-step tender offer for outstanding Pyramid shares by an acquisition entity wholly owned by Magic Hat, to be conditioned upon the acquisition of at least 66 2/3% of the outstanding shares of Pyramid. The tender offer, if consummated, will be followed by a merger of Magic Hat’s acquisition entity with and into Pyramid. The proposed transaction is also subject to the satisfactory completion of a due diligence review by Magic Hat of the business, financial and legal affairs of Pyramid, and receipt of necessary consents and approvals of regulatory agencies and third parties.

The Letter of Intent provides for the payment of a break-up fee payable by Pyramid to Magic Hat in specified circumstances, and also for the payment of Magic Hat’s reasonable expenses in specified circumstances, each involving the failure to consummate the proposed transaction.

Certain shareholders of Pyramid holding approximately 29% of the outstanding Pyramid common stock have, concurrently with Pyramid’s execution of the Letter of Intent, entered into a Tender and Support Agreement (the “Tender Agreement”) with Magic Hat, pursuant to which they have agreed to tender the shares owned by them in the Magic Hat tender offer and have granted Magic Hat an irrevocable proxy with respect to such shares. The portion of the shares subject to the Tender Agreement in excess of 19.9% of the outstanding shares of Pyramid common stock may be released from the provisions of the Tender Agreement in specified circumstances in connection with the receipt by Pyramid of unsolicited superior offers as defined in the Tender Agreement.

The closing of the proposed transaction, subject to the conditions referred to above, is anticipated to occur not later than August 31, 2008.

The board of directors of Pyramid has approved the transactions contemplated by the Letter of Intent.

“The combination of these two well established, high profile craft breweries will be very complementary given our respective brand portfolios and the geographies in which we predominantly operate. Additionally, there will be a number of important benefits for Pyramid to be part of a private company versus continuing to operate as a stand alone public entity. This consolidation makes both good strategic and financial sense and is well timed, particularly as the beer industry’s competitive dynamics continue to intensify,” said Pyramid CEO Scott Barnum. “The Company will continue to have offices in Seattle, its historical home, and will seek opportunities to capitalize on the enhanced assets and capabilities of the new combined entity,” he added.

Martin Kelly, CEO of Magic Hat said, “We have a great deal of respect for Pyramid’s brand heritage, award-winning beers and its dedicated employees, and look forward to consummating this transaction, which provides both strategic and financial benefits both to Pyramid’s and Magic Hat’s stakeholders.”

Link to article.

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