Dogfish Head Sells 15 Percent Stake to LNK Partners


Dogfish Head, the country’s 13th largest craft brewery, today announced it has sold a 15 percent stake to LNK Partners, a New York-based private equity firm that has previously invested in companies like Niman Ranch, Performance Bicycle, Beachbody and Au Bon Pain, among others.

Specific financial terms of the transaction were not disclosed. On its website, LNK said it typically invests between $50 — $150 million. Half of those investments are for minority equity positions, according to the firm.

LNK will obtain one seat on Dogfish Head’s board of directors, which currently has five voting members, as well as informal advisors. The brewery’s primary goal, Calagione said, is to fuel enough growth that it can eventually repurchase LNK’s 15 percent stake and keep Dogfish Head “family-controlled” for the next decade.

“They understand the primary goal is that the family buys them out at the end of their investment,” Calagione said, declining to comment on the specific timeline for the potential buyback.

For now, the money is important as it will allow Dogfish to continue growing, especially as the market continues to become more crowded with better-funded competition. The company recently completed a $50 million expansion, financed primarily through bank debt, as well.

“We lived through the first great shakeout of the craft era in the late 90s as brewers, beer geeks and mom-and-pop entrepreneurs,” he said. “Now as we go into the next most highly competitive moment in our industry, I see that it is not just home brewers and mom-and-pop entrepreneurs navigating this moment next to us.”


Increased investment activity in the sector caused Dogfish to reassess its options, Calagione suggested. Indeed, a rash of craft beer deals have taken place in just the past month.

“A lot of the people that are coming into the space are coming from outside of craft beer,” Calagione said. “We thought it would be helpful to have some external resources who have way broader experience in helping brands navigate competitive moments in their respective industries.”

The news comes less than two months after a Reuters report indicated that Dogfish Head was exploring the sale of a minority stake. At the time, Calagione refuted the idea that his company was on the market, telling Brewbound that he was “militantly sure of Dogfish Head’s future as a family-controlled company, for at least the next decade.”

In a note to employees informing them of the transaction, Calagione discussed the decision to bring on an additional investor. Over the years, Dogfish Head met with a number of potential financial partners to “better understand the plays that other craft breweries could or would be making,” Calagione wrote.

“But while these conversations happened, our talks have always been prefaced by our steadfast desire to remain a family-controlled and family-led company,” he wrote. “We remained firm in that position no matter who was sitting at the other side of the table pitching us their deal and we still do today.”

In the note, Calagione said that over time, the “value in partnering with LNK became clearer.”

“We went into our introductory meeting with LNK as if it would be our only, but rather found that the result was a robust and thoughtful dialogue about Dogfish’s solid and unique position in the craft beer industry,” he added.

In a statement, LNK managing partner David Landau described Dogfish Head as a “rare combination of a great management team and a great brand.”


“The team is incredibly talented and proven successful, and even more importantly they have the utmost integrity and they are just terrific people,” Landau said. “LNK deeply respects that Dogfish will remain a family-controlled business, and we’re very excited to be backing Sam, Mariah [Calagione’s wife] and Nick [Benz, Dogfish’s CEO] as they continue to grow the Dogfish brand while maintaining its authenticity and its premium off-center position. We look forward to helping and supporting the Dogfish team in any way we can.”

Calagione has publicly opposed selling to large international brewers like Anheuser-Busch InBev or MillerCoors; a deal with a private equity firm like LNK means Dogfish can continue to call itself a craft brewer under the definition established by the Brewers Association.

“At the Dogfish Board of Directors level there will be one representative joining who will bring some diversity of thought and experience to that group,” Calagione wrote. “Additionally, they will be acting as thought partners for Mariah, Nick and I to challenge us, provide sounding board and offer other best practice advice.”

Sam also said he and wife Mariah “contemplated whether filling our voids could be just as easily achieved through the work of a rock solid consultant but in the end Mariah and I agreed that allowing LNK to take a modest 15 [percent] ownership position would provide the skin in the game that would align us to winning.”

Dogfish Head was advised by McDermott, Will & Emery and Arlington Capital Advisors, the same firm that worked with Abita Brewing on its sale to Enjoy Beer LLC and earlier this year teased a “forthcoming top 15 brewery transaction” in a solicitation e-mail sent to select 2015 Craft Brewers Conference attendees.

Today’s announcement marks the sixth craft transaction this month. Lagunitas Brewing sold a 50 percent stake to Heineken International; Saint Archer Brewing sold a majority stake to MillerCoors; Golden Road Brewing and Virtue Cider sold to Anheuser-Busch InBev; and Cisco Brewers is currently in talks to sell a minority stake to Craft Brew Alliance.