It turns out that, when we wrote in September that “it will be interesting to see Magnolia’s next move,” we were more right than we realized. A newly formed group established by New Belgium has agreed to buy Magnolia Brewing Company’s assets, the company announced today. The move will breathe life back into a longstanding brand hamstrung in recent years by financial woes.
As outlined in a press statement, Magnolia will become a majority-owned subsidiary of New Belgium, while Dick Cantwell, formerly of Elysian Brewing, and Oud Beersel, a producer of Belgian lambics, will become minority owners. The company says Magnolia founder Dave McLean will stay on in an unspecified capacity as an employee of the new partnership. The companies involved could not be reached for further comment as of press time.
As for why the company is reaching into California, New Belgium says the acquisition will enable it to invest further in both experimental brewing and retail operations, given Magnolia’s varied resources. Founded in 1997, Magnolia is a staple in the Haight-Ashbury district and more recently opened a trendy new meat-and-three brewpub concept in the fast-evolving Dogpatch area of San Francisco.
Though well equipped, Magnolia itself has spent the last few years navigating choppy financial waters. In 2015, the company filed for Chapter 11 bankruptcy, a result of incurring too much debt than it could manage while building out its $3 million Smokestack restaurant.
“We’re profitable from our operations, but have a lot of debt that we need to restructure,” McLean told SF Gate at the time.
Today, he says he’s “incredibly grateful” for the opportunity to partner with New Belgium, Cantwell, and Oud Beersel.
“Magnolia has had quite a journey in San Francisco for nearly two decades, including some very challenging and difficult times in recent years,” he says in a statement.
As a result of the bankruptcy situation, it’s worth noting that a creditor was involved in the decision-making, not just Magnolia. And New Belgium wasn’t the only bidder, according to sources close to the matter.
New Belgium says Magnolia’s lineup will likely remain “unchanged,” though it does plan to begin creating new offerings. The company specifically makes note of plans to install wooden aging vessels as well as a coolship to create what it calls “the world’s first dedicated Lambic blender outside of Belgium.” To designate a beer a “Lambic,” it must be produced in Belgium. To that end, minority partner Oud Beersel is expected to ship his own traditional Lambic brews over seas to be blended with Magnolia beers, something the New Belgium team is familiar with in their collaborative Transatlantic Kriek beer also made with Oud Beersel.
For Cantwell, the other minority partner, this deal marks his re-entry into the beer business. He helped co-found Elysian Brewing of Seattle but resigned from the company in April of 2015, three months after it had been acquired by Anheuser-Busch InBev. Cantwell also happens to date fellow craft beer industry pioneer and now business partner Kim Jordan, who co-founded New Belgium.
“I’m tremendously excited to be back in the beer business and looking forward to working with the team at Magnolia to develop new beers and new ideas,” Cantwell says. “This project is the natural evolution of a longstanding strategy of collaboration between myself, New Belgium and Oud Beersel.”
The transaction itself is expected to close in September.