KPS Agrees to Buy Labatt USA

(Reuters) – Anheuser-Busch InBev (INTB.BR), the world’s largest brewer, said on Monday it had agreed the sale of InBev USA, the U.S. distributor of Canadian beer Labatt, to an affiliate of private equity firm KPS Capital Partners.

The sale was a requirement imposed by the U.S. Department of Justice to clear InBev’s $52 billion takeover of U.S. rival Anheuser-Busch, completed in November.

Labatt Brewing Corporation, part of the AB InBev empire, was also entering into agreement to supply Labatt-branded beer to InBev USA, also operating as Labatt USA, for up to three years, after which the purchaser would be responsible for production.

No financial details of the deal were disclosed.

KPS Capital Partners is a private equity firm with over $1.8 billion of committed capital, AB InBev said in a statement. (Reporting by Philip Blenkinsop; editing by John Stonestreet)

KPS Capital Partners, LP (“KPS”) today announced the formation of North American Breweries, Inc., a national platform for investments and growth in the beer and malt beverage industries, as well as its first three transactions:
    —  An agreement to acquire Labatt USA from Interbrew International B.V., a
        subsidiary of Anheuser-Busch InBev (Euronext: ABI).
    —  The acquisition of substantially all of the assets of High Falls Brewing
        Company, LLC.
    —  The acquisition of a perpetual license for the Seagram’s Cooler
        Escapes and Seagram’s Smooth brands from Pernod Ricard USA, LLC.

Financial terms of the transactions were not disclosed.

Raquel Vargas Palmer, a Partner of KPS, said, “The formation of North American Breweries gives us an outstanding growth platform in the beer and malt beverage industries that is exceptionally positioned to create value for our investors. With the acquisition of the High Falls Brewery, we purchased one of the largest independent breweries in the United States with exceptional brewing capabilities, a committed workforce and a nationwide distribution network. With High Falls we also acquired the Genesee and Dundee brands, and a perpetual license for the Seagram’s Escape and Smooth brands, which range from historic to relatively young brands that will benefit from a renewed focus and investment.

“The acquisition of High Falls was the result of a complex, multi-constituency recapitalization and restructuring transaction,” Ms. Palmer continued. “The hard work by many organizations and individuals to complete this transaction demonstrates the effectiveness of the KPS investment strategy. The transaction could not have occurred without the support of the City of Rochester and the County of Monroe and the commitment of its public officials. We also thank the International Brotherhood of Teamsters for their support and encouragement.

“We are extremely excited to invest in the Labatt brands in the United States. We intend to continue to focus on the authenticity, taste and quality that one associates with this historic Canadian brand.

“We intend to continue to grow North American Breweries aggressively, both organically and through acquisition of new brands and exceptional breweries,” Ms. Palmer concluded.

James Pendegraft, President of Labatt USA, said, “KPS recognizes the significant value we have created in the Labatt brand by promoting superb products and maintaining a strong commitment to our consumers. We look forward to working with our distributors, customers, and employees to continue to build a very successful company.”

The Labatt USA acquisition is subject to approval by the Department of Justice and customary closing conditions. It is expected that the transaction will be completed soon after the Department of Justice approval is received.

Financing for the acquisition will be provided by KPS Capital Finance Management LLC. Jenner & Block LLP acted as legal counsel to KPS and North American.

About KPS Capital Partners, LP

KPS Capital Partners, LP is the manager of the KPS Special Situations Funds, a family of private equity funds with over $1.8 billion of committed capital focused on constructive investing in restructurings, turnarounds and other special situations. KPS has created new companies to purchase operating assets out of bankruptcy; established stand-alone entities to operate divested assets; and recapitalized highly leveraged public and private companies. The KPS investment strategy targets companies with strong franchises that are experiencing operating and financial problems. KPS invests its capital concurrently with a turnaround plan predicated on cost reduction, capital investment and capital availability. Typically, the KPS turnaround plan is accompanied by a financial restructuring of the company’s liabilities. The KPS investment strategy and portfolio companies are described in detail at the firm’s website:

About Labatt USA

Labatt USA, based in Buffalo, New York is the exclusive marketer and seller of Labatt brand beer in the United States. The Labatt USA brands include the flagship pilsner, Labatt Blue, as well as Labatt Blue Light, Labatt Ice, Labatt Max Ice, Labatt Heritage Series, Labatt 50, Labatt Select and Labatt Blue Non-Alcoholic. The Labatt brand was founded in London, Ontario in 1847.

About High Falls Brewing Company

High Falls Brewing Company, based in Rochester, New York, is one of the largest and oldest continually operating breweries in the United States. High Falls is best known for its historic Genesee line of brands, as well as its Dundee Ales & Lagers family of craft brands, which includes the Original Honey Brown Lager. Additionally, through its Allied Brands division, High Falls is America’s exclusive distributor of several imports including Steinlager from New Zealand, Toohey’s New from Australia, Thwaites from the U.K., and Imperial from Costa Rica. High Falls also manufactures beer and other alcoholic and non-alcoholic beverages under contracts on behalf of other companies.