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Lion pays $25m for "runaway train" Panhead

NZ Newswire logoNZ Newswire 17/02/2017 Paul McBeth

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.

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 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 $34.7m a year earlier. Sales rose 5 per cent to $561m. Total volume sold rose just 1 per cent 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 per cent gain in profit in 2016.

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