Bankers Weigh In On Potential Pabst Sale

As the saying goes, ‘where there’s smoke, there’s fire.’

On Saturday, Reuters reported that veteran food industry investor, C. Dean Metropoulos, was in the early stages of finding a new owner for Pabst Brewing Co., the country’s fifth largest beer vendor.

Pabst, which is also reportedly considering an IPO, has hired investment bank Perella Weinberg Partners to assist with the process. Mark Semer, a spokesperson for Pabst Brewing, could not confirm the Reuters report but did provide a joint statement from co-CEOs Daren and Evan Metropoulous.

“The future is exciting for Pabst Brewing Company,” the statement read. “We are considering financial alternatives that will enable PBC to aggressively pursue its next phase of growth through strategic acquisitions.”

That doesn’t exactly scream liquidity, but if the company were to sell, what it would it be worth?

Pabst’s estimated EBITDA is $80 million, sources familiar with the matter told Brewbound. Reuters said the company could fetch between $500 million and $1 billion, meaning that any buyer could be looking at a double-digit multiple.

“You have a brand that attracts a different audience and has a nostalgia appeal,” said Craig Farlie, the managing director of investment banking firm Farlie Turner & Company. “The brand clearly resonates with younger drinkers and I would think those qualities would be attractive to a strategic.”

Some industry experts that Brewbound spoke with suggested that MillerCoors, because of its existing contract brewing and distribution arrangements with Pabst, could be a suitor.

While wholesale and production synergies make MillerCoors an obvious contender, other interested strategic buyers could include Florida Ice & Farm (which already owns North American Breweries) or international brewers in Japan and Europe, a source said.

But questions about the Pabst’s executive management— the company is currently searching for its fifth new chief operating officer in the last four years — have led some to believe that an IPO is unlikely.

“Do I see it as an option, yes, but do I see it as a realistic option, probably not,” Farlie said. “$500 to $1 billion is not huge for a public company. I’m not going to say it can’t happen, but my sense is that if he (C. Dean Metropoulos) wants to exit the brand, it is a lot easier to do so through a sale rather than an IPO.”

Metropoulos acquired Pabst from Kalmanovitz Charitable Foundation in 2010 for a reported $250 million. That same year, in an interview with Bloomberg, Metropoulos told the outlet that with his sons involved, he had planned to keep the business within the family for at least 20 years.

In 2013 IRI pegged dollar sales for the brand up slightly, to more than $480 million, in multi-outlet and convenience channels. The Pabst Blue Ribbon brand itself accounts for more than half of the company’s sales.

In addition to PBR, Pabst’s portfolio includes Schlitz, Old Milwaukee, Lone Star, Colt 45, and more.

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