Panhead's Quickchange XPA. Rotorua Daily Post Photograph by Ben Fraser
Panhead's Quickchange XPA. Rotorua Daily Post Photograph by Ben Fraser
Lion, 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,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 per cent to $561 million. Total volume sold rose just 1 percent in the latest year.
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 per cent gain in profit in 2016. However, the brewer's gross margins shrank to 36.9 per cent in 2016 from 38.8 per cent a year earlier.
