Boston Beer to acquire Diageo Brewery

Boston Beer to acquire Diageo Brewery

Boston Beer to acquire Diageo Brewery

Boston Beer Company, the maker of Samuel Adams beer, is buying a Pennsylvania brewery from Diageo North America Inc. for $55 million to add more than 1.6 million barrels of annual production.

The company decided to buy the brewery rather than build one because of rising copper and steel costs, higher prices for European equipment because of the lower value of the dollar, and other construction and production expenses, chief executive Martin Roper said.

Boston Beer, whose sales rose 17 percent in 2006, has been looking for ways to increase brewing capacity, and had considered expanding breweries it owns, building one, or buying existing locations. The company said it will back away from building a brewery in Freetown, Mass., where it bought an option on land last year.

"Comparing the projected construction costs of a new brewery against the price of buying and renovating the Pennsylvania brewery leads us to believe this is the better long-term strategic decision for the company," Roper said. "We are able to secure twice the brewing capacity for less than half the cost of building the Freetown brewery."

The company said it spent more than $4 million just to determine how much it would cost to build a brewery, and estimated construction costs at more than $200 million. Boston Beer will hold the rights to the Freetown property until the purchase of the Pennsylvania site is completed.