Boston Buys Brewery

The Boston Beer Company, Inc. , announced today that it has signed a purchase and sale agreement with Diageo North America, Inc. to acquire a brewery located 60 miles outside of Philadelphia, for $55 million.

The company will discontinue exploring the option of building a new brewery in Freetown, Massachusetts.

It is estimated that the Pennsylvania brewery will initially increase Boston Beer’s brewing capacity by approximately 1.6 million barrels of beer annually with the potential for expansion to over 2 million barrels with modest incremental investment.

The Pennsylvania brewery will complement the breweries that the company owns and operates in Boston, Massachusetts and Cincinnati, Ohio.

. The brewery is expected to begin brewing Samuel Adams beers in the third or fourth quarter of 2008.

“The plant in Breinigsville, located in the Lehigh Valley, has extremely dedicated employees, an award-winning brewing history, and a welcoming community and business environment. Without its brewhouse in full operation, however, it has been under-utilized,” said John Council, President, Diageo Global Supply, Americas. “This sale to Boston Beer enables Diageo to better utilize its manufacturing footprint and further drive operating efficiency.”

Over the past few years, Boston Beer has considered several ways of increasing brewing capacity including expanding its existing breweries, building a new brewery on a site in Freetown, Massachusetts or buying one of several breweries around the country that were potentially available.

Last year, The Boston Beer Company entered into an agreement with an option to purchase a parcel of land in Freetown, Massachusetts as a site for the construction of a new brewery. Over the course of the last year, the company invested over $4 million in an exhaustive evaluation of the cost of constructing a new brewery. After this process, it became clear that construction, whose cost estimate now significantly exceeded $200 million, might not be the company’s best long-term brewing option.

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