Atlanta-based SweetWater Brewing Company has been acquired by Aphria Inc., a cannabis company. The deal is expected to close by the end of 2020.
The “420 Strain” brands are the central focus of Ontario based Aphria, which started with 420 Strain G13 IPA. This acquisition is Aphria’s first venture in the United States.
Rumors have circulated around the Atlanta beer scene for years about a potential SweetWater Brewing sale. The fact it’s ultimately a cannabis company involved in the acquisition is surprising to many.
Founder Freddy Bensch had been in town from his home in Telluride, Colorado this week. Most employees were not informed of the acquisition until the press release hit the newswire.
According to Aphria, SweetWater’s management team will remain in place, along with 125 brewery employees. Bensch will remain CEO of SweetWater, reporting to Irwin D. Simon, CEO of Aphria, Inc.
Aphria, Inc (Nasdaq: APHA) is a leading world medical cannabis company, founded in 2013. According to the company’s 2019 annual report, Aphria has cultivation licenses in 10 countries, including Canada, Italy, Germany, and South Africa. The acquisition marks Aphria’s effort to capitalize on the burgeoning U.S. cannabis market. As of market close on November 4th, the company’s stock price is valued at $4.97 USD per share.
In early 2018, SweetWater debuted the 420 Strain Series of beers using terpenes (organic smell compounds) isolated from various famous cannabis strains. G13 IPA was the inaugural release and was the brewery’s second best-selling beer within a few months.
Aphria states the $300 million dollar acquisition will position the company with a platform and infrastructure within the states to access the U.S. market should cannabis be federally legalized in the future. 5 states legalized cannabis as a result of this week’s elections. The pickup of SweetWater will diversify the company’s revenue mix, as well as open up massive cross-selling opportunities in both U.S. and Canada.
Upon closing, SweetWater Brewing Company will be a wholly-owned subsidiary of Aphria, Inc. SweetWater receives $250 million in cash plus $50 million in Aphria stock. Additionally, SweetWater is eligible to receive up to $66 million of additional cash under an earnout through the end of the calendar year 2023
SweetWater Brewing Company was founded in 1997 and currently has distribution in 27 states. As of 2019, the brewery was ranked 14th in volume nationally by the Brewer’s Association.