NYC Beer Distributors Reach Tentative Merger Agreement

The stage is set for a mega-merger between two of New York City’s largest beer distributors.

A tentative agreement between Bronx-based Manhattan Beer Distributors — which will sell and deliver more than 35 million cases of beer in 2014 — and Brooklyn-based Windmill Distributing (d/b/a Phoenix\Beehive Beverage Distributors) is expected to close in the first quarter of 2015, according to Mike Mazzoni, an advisor on the transaction.

“This deal has been under discussion, on and off, for many years,” Mazzoni told Brewbound. “We have agreements in principle and I’d say we are 95 percent of the way there. There are still things that need to be resolved but we are in the process of moving towards documents.”

When finalized, the deal will bring two of New York’s most prominent beverage distributors under one roof. According to Beer Marketer’s Insights, a subscription-based trade publication, Phoenix\Beehive currently sells about 13 million cases of beer annually.

“Optically, there shouldn’t be much of a change,” Mazzoni said. “It will be a larger company with a bigger portfolio.”

Combining the two operations means that Manhattan Beer will control approximately half of the New York City beer market, in which annual sales are estimated at roughly 100 million cases.

Mazzoni, a longtime beer industry veteran who has served as an advisor on hundreds of distributor mergers over the years, couldn’t comment on specific terms of the transaction but was able to provide some insight into the inner-workings of the deal, which will include the acquisition of both distribution rights and operating assets.

“We haven’t been able to work out all of the details,” he said. “The finances are pretty well worked out. We have done a lot of work on valuation and we are trying to figure out a framework of what ‘new co.’ will look like.”

The deal is still pending supplier approvals, Mazzoni said.

Finalizing a deal, which had been rumored for many years, has been challenging because of the way Windmill is structured, Mazzoni said. The wholesale operations is a joint venture between three parties — Heineken, MillerCoors and the Brayman family, which started the distributor in 1951. Heineken currently owns 15 percent of the joint venture and MillerCoors owns just 5 percent, Mazzoni said. The Brayman family owns the remaining 80 percent of the business.

“Manhattan will remain in existence and Windmill will go out of existence,” Mazzoni said. “Heineken and MillerCoors will not be involved in the successor.”

Mazzoni said he is “confident” that a deal will be reached but cautioned against calling it a finished one.

“There is a high probability that it will get done, but we do not have an official agreement,” he said.

Phoenix\Beehive sells a variety of beer, wine, sprits and non-alcoholic beverages, including craft brands like Brooklyn Brewery and Anchor Brewing. The company also sells a number of import and domestic beer offerings.

Manhattan sells a number of craft beers as well as products from MillerCoors and Constellation Beer.

Calls placed to both Phoenix\Beehive and Manhattan Beer were not returned as of press time.

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