Lion to pay up to $25.1m for runaway train Panhead

Lion managing director Rory Glass

Lion - Beer, Spirits & Wine (NZ), the local unit of Japanese brewer Kirin Holdings, will pay as much as $25.1 million for its newly acquired Panhead Custom Ales craft beer brand, which the local head has described as a "runaway train."

The Auckland-based brewer and winemaker paid $15.1 million in cash upfront for Brand Strong Ltd, the Panhead holding company, and will pay a further $10 million based on earnings over the next four years, accounts filed to the Companies Office show. The contingent consideration was discounted to a net present value of $7.8 million at the date of acquisition.

Lion agreed to buy Panhead in May last year from the family of founder Mike Neilson and New Zealand managing director Rory Glass this week said the brand had been a "runaway train" and the brewer had struggled to keep pace with demand. Lion bought Dunedin-based Emerson's Brewing Co for $8 million in 2012.

At the time of acquisition, Panhead had trade and receivables of $985,000 and $264,000 of inventory, with a further $2.1 million in property, plant and equipment and $5.6 million in intangible assets. Trade and other payables amounted to $1.5 million and the craft beer brewer had taken $100,000 of provisions.

Lion's net profit rose to $38.7 million in the 12 months ended September 30, from $34.7 million a year earlier. Sales rose 5% to $561 million. Total volume sold rose just 1% in the latest year.

Mr Glass cited sales growth for its craft beers and the trend of "premiumisation", where consumers seek out better and more expensive beers, for the company's 12% gain in profit in 2016. However, the brewer's gross margins shrank to 36.9% in 2016 from 38.8% a year earlier.

(BusinessDesk)


1 · Got a question about this story? Leave it in Comments & Questions below.

This article is tagged with the following keywords. Find out more about MyNBR Tags

1 Comment & Question

Commenter icon key: Subscriber Verified

Runaway trains have a habit of derailing, Panhead is no longer craft beer it is corparate beer and that will be their problem.

Reply
Share
  • 0
  • 0

Post New comment or question

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.

NZ Market Snapshot

Forex

Sym Price Change
USD 0.7170 -0.0012 -0.17%
AUD 0.9137 -0.0023 -0.25%
EUR 0.6086 -0.0006 -0.10%
GBP 0.5410 -0.0012 -0.22%
HKD 5.5991 -0.0082 -0.15%
JPY 80.3600 -0.2270 -0.28%

Commods

Commodity Price Change Time
Gold Index 1301.2 -8.600 2017-10-16T00:
Oil Brent 57.6 0.670 2017-10-16T00:
Oil Nymex 52.1 0.420 2017-10-16T00:
Silver Index 17.3 -0.071 2017-10-16T00:

Indices

Symbol Open High Last %
NZX 50 8090.7 8114.1 8090.7 0.23%
NASDAQ 6622.6 6632.5 6605.8 0.28%
DAX 13017.2 13026.5 12991.9 0.09%
DJI 22892.9 22960.1 22871.7 0.37%
FTSE 7535.4 7557.0 7535.4 -0.11%
HKSE 28777.2 28777.2 28692.8 0.17%
NI225 21352.2 21394.0 21255.6 0.15%
ASX 5846.8 5894.9 5846.8 0.76%