Constellation Brands Acquiring Craft Brewer for $1 Billion

Constellation Brands placed a $1 billion bet on the rapidly expanding craft beer market on Monday announcing that it reached an agreement to purchase Ballast Point Brewing and Spirits based in San Diego for a price of $1 billion.

Founded in 1996, by a group of home craft brewers, Ballast Point was the No. 31 largest U.S. craft brewer back in 201.

It makes over 40 types of beer, including Grapefruit Sculpin IPA and Sculpin IPS. The purchase will allow Constellation to compete in the craft beer arena that is quickly expanding.

As the mainstream U.S. beers have been struggling over the past few years, Constellation grew. It has become one the country’s beer giants by selling imports from Mexico including Modelo Especial, Pacifico and the very popular Corona.

It has already branched into the craft beer sector, teaming with Rick Bayless the celebrity chef and Two Brothers a local craft brewery to launch a style of Belgian White beer known as Tocayo Hominy White Ale earlier in 2015.

Rob Sands the Constellation CEO said that craft beer, along with imports, is an important driver of growth in the industry. Craft beer has doubled its overall share of the beer market in the U.S. in the past five years.

Sands added that Ballast Point has been an important driver of the growth in the craft beer industry. Their entrepreneurial spirit and business philosophy said Sands is perfectly aligned with Constellation’s culture and the company looks forward to strengthening its positions in the segment of high end craft beer with what is arguably the best premium major brand in all of the craft beer sector.

Jack White the founder of Ballast Point and his team of executives will continue running Ballast Point, said Sands. The brewer should reach a sales figure of 4 million cases of beer in 2015, which more than doubles its overall sales for 2014.

This transaction, which is to be financed by a combination of debt and cash, is expected to close before the end of 2015. Constellation is Victor, New York-based and its beer division is based in Chicago.

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