11-16-2009 - Vol. 40 / No. 21Flurry of early Nov articles that Pabst for sale perhaps triggered by release that said Pabst owner S&P "has taken one more step towards the sale of Pabst as required by Federal tax rules. In consultation with its financial adviser BofA Merrill Lynch, it has prepared a Descriptive Memorandum," release sez. Contact info includes both S&P and BofA Merrill Lynch associate Peter Lavallee in NY, who's handling sale. When reached by INSIGHTS, Peter had no comment beyond acknowledging that his firm "running a sale process." That's not exactly new news; INSIGHTS reported it back in May. But at least one thing has changed, i.e. this semi-public stance. Question is why?
Well, clock is ticking for one thing. Deal theoretically needs to happen by Jun 2010. That's when IRS 5-yr extension allowing Pabst to remain part of charitable foundation expires. Not ironclad, we hear, and Pabst could even get another extension. Still, effort to sell Pabst more serious this time. When INSIGHTS wrote about it last spring, several had already kicked tires. They were daunted by mix of pension liabilities, leftover debt from Stroh takeover, and purchase price, around $300 mil all-in. That same $300 mil resurfaced in Nov 2 NY Post article. Don't know if anyone will pay that.
Whatever magic # is, only one name has surfaced recently as getting closer to Pabst deal: KPS Capital. So far in 2009, KPS has already bought Labatt and High Falls, forming North American Breweries. It paid down debt incurred in Labatt purchase within a few short mos. That was a sweetheart deal at under $60 mil, because ABI had to sell. Could lightning strike twice? KPS likes what it sees of cash flow in beer biz and is "pursuing anything it can," sez 1 distrib. KPS probably most logical buyer of Pabst, if it can make #s work. But it's a complicated deal, including yet one more piece to puzzle. MillerCoors has strong rights' in terms of contract production. Asked on conference call if MC would exit contract biz, MillerCoors cfo Gavin Hattersley said: "We're very comfortable" contract brewing and have "no plans to exit that business." Asked if it had change of control clause with Pabst, Gavin had no comment. So stay tuned.
