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Merger management giant Lazard Is counseling New Belgium


Lazzard RS

By Roger McCredie-  The “New York Company” that is advising New Belgium Brewing about putting itself up for sale has been identified as Lazard, a 168-year-old financial consulting and asset management firm that is both a pioneer and a giant in its field.

Founded by five French brothers in New Orleans in 1848, Lazard now maintains offices in 43 cities worldwide, with principal executive offices in New York, Paris and London and an international headquarters in Hamilton, Bermuda.  Its shares are traded on the New York Stock Exchange and its immediate past CEO is currently serving as Undersecretary of the United States Treasury.

Lazard is the biggest single dealmaker in a bustling brewery market that is suddenly abuzz with mergers and acquisitions as larger companies snap up promising craft brewers who have come of age during the “yuppie renaissance” of the past 20 years.

Last month Reuters News Agency broke the news that Fort Collins, CO-based New Belgium, which has spent two and a half years and millions of dollars making Asheville its East Coast headquarters, was exploring the possibility of selling up.  In its original report, Reuters even named Lazard as the consultant New Belgium was working with.

One of Lazard’s principal clients is Anheuser-Busch InBev, and the firm presently is helping broker a merger between the Budweiser manufacturer and another beer behemoth, SABMiller.  That deal alone is estimated to be worth $100 billion.  And just before Christmas Anheuser-Busch, which is said to be “in buying mode” snapped up Breckenridge, another Colorado brewery.  The same week, A-B it also bought out London’s Camden Town Brewery.

But Lazard’s identity and the implications of New Belgium’s hiring it were mostly ignored in trickle-down reportage and New Belgium immediately issued a pre-emptive statement saying no sale was planned and the brewery was doing nothing more than acting in its employee-shareholders’ best interests by keeping an eye on the market. “There is no deal pending at this time,” New Belgium co-founder and board chairman Kim Jordan stated flatly.

But the mere suggestion that the thought of selling out might cross New Belgium’s mind has been enough to set off seismic reactions in Asheville.

Asheville and Buncombe County ponied up $8.5 million worth of development incentives to bring New Belgium to town, although in-kind infrastructure repairs and additions have brought the total financial commitment to nearly double that.  New Belgium in turn promised to contribute about 140 jobs to the local economy, though it later developed that many of the indicated jobs would be filled in or by Fort Collins.  Approximately 50 workers are currently employed in Asheville and the company has said more jobs will be forthcoming next  month, when the brewery expects to begin turning out product.

Skeptics, many of whom have vocally objected to the brewery’s negative impact – in terms of neighborhood disruption, traffic problems, and cost to taxpayers in a precarious local economy – have posited that New Belgium has been using Asheville all along as a means to an end.

“You don’t get in bed with a company like Lazard without some long range plans,” said one observer who asked for anonymity.  “It is plain as the nose on your face that [New Belgium] made the whole Asheville move so that it could have an east coast branch in play when it puts itself on the market.  That’s like adding another bathroom to a house just before you plan to sell it.”

Like most such municipal transactions, the city’s financial offerings to New Belgium are performance based.  The Brewery can only avail itself of them once it has attained certain benchmarks in its own development and promised benefit to the community.  But critics say they doubt whether, if New Belgium were to be sold, these obligations would be binding upon a new owner. When the sale rumor first surfaced, Mayor Esther Manheimer said:

“To me a corporate transfer doesn’t necessarily mean anything about the experience our city will have with this company. It may just mean a change in ownership. It may not mean a change in the employees or the number of employees they plan to hire or their agreements. It may have no implications in terms of their agreements with the city.”

Manheimer’s extensive use of the conditional tense apparently did little to allay fears and misgivings about the impact the sale of New Belgium to a third-party corporation would have.  But in an interview last week, Sam Powers, director of community and economic development for the city of Asheville, staunchly maintained. “these benchmarks will still apply if New Belgium Brewing or another entity owns the business.

The Tribune asked Powers by e-mail how he could be so sure, particularly given the cautious tone of the mayor, who is a lawyer.  Powers did not respond.

One demographic group that has seemed particularly dismayed by the possibility that New Belgium could be sold is the segment of Asheville’s population formerly known as “yuppies.”  Corporate insiders, including New Belgium’s own marketing team, now refer to them as “BoBos.”

The term is a contraction of “bourgeois Bohemian” and it was originally coined in 2000 – which is often cited as the takeoff year for the craft brewing industry – by New York Times writer David Brooks in a book called Bobos in Paradise: The New Upper Class and How They Got There.

Bobos have been described as “a hybrid of the ‘liberal idealism of the 1960s and the self-interest of the 1980s,’ [in other words] hipsters with money.”  According to The Cultural Strategy Group, which put together a niche marketing plan for New Belgium in 2000, BoBos have made up the hard core of customers who have brought New Belgium to its present position as the nation’s fourth-largest craft brewery.  Asheville’s significant BoBo population, which some say would include by definition much of the city’s government and administration, is said to have been a major factor in New Belgium’s decision to locate here.

New Belgium self-vision, marketers say, “personifies green chic,” as evidenced by its designation as a “B-Corp” –   a company certified by the nonprofit B Lab “to meet rigorous standards of social and environmental performance, accountability, and transparency.”  To  Asheville’s BoBos, this designation has raised New Belgium from a beer brewer to a cultural icon before it has even turned out its first local can of Fat Tire Ale.  A change of ownership, even if much of the actual operation were left intact, could seriously upset the BoBos and actually be a sales downer, marketers claim.  Writing in “Beer Street Journal” last month, blogger Eric Carter said:

“The prospect of a sale raises difficult issues for Jordan, other board members and New Belgium’s 600-plus employee shareholders. The company’s identity is tied to employee ownership and progressive stances on climate change, the living wage movement, bicycle advocacy and other issues. Its B Corp certification, which it gained in 2013, burnishes that reputation. “

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