Constellation paid approx $1 bil for Ballast Point, perhaps this yr's hottest craft brewer. That's whopping 8.7x projected 2015 revs of $115 mil, or over $3500 per bbl and quite possibly over 30x this yr's EBITDA (2015 EBITDA figure not given, tho Ballast Point oper income at $25 mil thru Sep.) Constellation projected mid-to-high teens multiple for next yr's earnings-clearly expecting big growth. Ballast Point had filed to go public with SEC. It more than doubled thru Sep to 199,000 bbls. It expects to sell 4 mil cases (290,000 bbls, not 280,000 INSIGHTS had written previously) in 2015. But Ballast Point dropped its IPO and took the cash. Who can blame 'em? Could this be apex in craft deals and craft valuation? It capped a crazy yr of frenzied deal activity. Fittingly it's the first one to hit the $1 bil mark (Lagunitas close). In spring of 2011, Goose Island sold for just $38.8 mil (it was about same size in 2010 as Ballast Point in 2014). That's about 4% of the price Ballast Point got 4.5 yrs later. This yr, we've tracked nearly 20 craft transactions so far, for part or all of craft brewers. So craft landscape too has changed utterly. Now each of AB, MC, Heineken and Constellation Brands have significant presences in segment. Battle lines are being drawn between independent craft brewers and the giants. Many folks commented on high price Constellation paid. But $1 bil ain't that big a deal for STZ, with mkt cap of $28 bil. Moody's noted that its debt to EBITDA would increase, from 3.9 to 4.3x. Not exactly an alarm bell. Especially if Constellation buying "literally the crown jewel of craft," as ceo Rob Sands told INSIGHTS.
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