Ohio Group buys Frederick Brewing
Cleveland company adds Blue Ridge, Hempen and Wild Goose brands
Aug 26, 1999 - Snyder International Brewing Group isn't a name particularly well known by beer drinkers, but following a deal this week the Cleveland-based brewer now produces popular brands such as Little Kings Cream Ale, Crooked River, Blue Ridge, Hempen, Wild Goose and Brimstone.
Since entering the beer business last year, Snyder has acquired Crooked River brewery in Cleveland, the brands of Hudepohl-Schoenling (Little Kings, Hudy delight and Christian Moerlein) and now Frederick Brewing Co., its Maryland brewery and brands. Frederick created the Blue Ridge and Hempen brands and last year bought the Wild Goose and Brimstone breweries, closed those breweries and began producing the beers in Frederick.
Snyder paid $2 million in cash for 4.4 million newly issued shares of Frederick Brewing common stock, representing 51 percent of the common voting shares. The price is equivalent to about 45 cents a share -- 74 percent less than Wednesday's closing price of $1.75. It paid another $422,000 in cash and warrants for the the private entity that owned the brewery and its 5.5-acre site.
Snyder chairman C. David Snyder got into the beer business after he sold his technology consulting firm, Realogic Inc., last August. That month, with no background in beer, Snyder purchased the bankrupt Crooked River Brewing Co. in Cleveland for $540,000. He later purchased the Little Kings brand.
Snyder also assumed about $2.6 million of brewery debt at Frederick. In addition, Frederick Brewing's creditors agreed to forgive about $1.2 million in debt, reducing Frederick Brewing's liabilities by 26%.
Frederick expanded quickly since opening in 1992, adding capacity and taking on debt at about the time the rapid growth rate of microbrewery sales began to slow. Is financial woes were well publicized. The brewery has the capacity to produce 170,000 barrels of beer per year but shipped just 31,500 in 1998.
Snyder said that his Cleveland brewery is now operating 20% over capacity. "It's a nice problem, but nonetheless a problem." He plans to begin brewing beer for Ohio in Frederick as early as next week.
The company will use the new brewery to expand its market. Frederick co-founder Kevin Brannon said the Little Kings brand would likely be introduced in Maryland. Frederick Brewings brands, namely Wild Goose, may also be introduced in Ohio.
Brannon and Marjorie McGinnis, a married couple who founded the brewery, will not be associated with the new operation. Brannon said they will invest in a "tourism-related business" outside the United States. Brannon said Snyder granted McGinnis' request that she get two free cases of Frederick-brand beer every month for the rest of her life.
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