Update, July 28, 2022: Today, Kihei, Hawaii-based Maui Brewing confirmed it will indeed acquire Modern Times for $15.3 million, twice as much as Maui’s initial “stalking horse” bid of $7.62 million. The transaction is set to close in October.
It’s been three weeks since Modern Times CEO Jennifer Briggs announced that Anaheim, California-based Brewery X, previously declared the winner of the auction to purchase Modern Times, had chosen not to complete the transaction. Maui CEO Garrett Marrero says his company took the last three weeks to “evaluate and solidify details” of the transaction before making an announcement today that the deal will indeed go through. “The delays were painful for all; however, it was important that we waited until we had made concrete decisions to avoid any further emotional whiplash for our collective teams,” Marrero stated in a press release.
Below is a timeline of the months-long back-and-forth regarding Modern Times’ ownership:
February 14: Modern Times announces it will close four of its eight taprooms, resulting in 73 layoffs.
February 24: Modern Times CEO Jennifer Briggs tells Good Beer Hunting the company is actively seeking a buyer to help alleviate its debt burden.
April 6: Modern Times says it will likely enter financial receivership after one of its lending banks initiated litigation. As a result, a bank appointed an individual to be the “receiver” or financial decision-maker for Modern Times until it could be sold.
May 25: Maui Brewing enters an initial “stalking horse” bid of $7.62 million for Modern Times, which will be sold at auction. The deal would provide Maui a physical foothold and production capacity on the mainland U.S., and would allow Modern Times to continue to exist as a brand and operate its brewery within the larger Maui portfolio.
June 17: At auction, Brewery X emerges as the winning bidder, set to acquire Modern Times for $20 million.
June 20: Lawyers for MTD Asset Acquisition LLC, a competing bidder, file an objection to the outcome of the June 17 auction in which Brewery X was declared the winner. A judge must now rule on the winner of the auction.
June 27: Judge John C. Gastelum of the Superior Court of California in Orange County ruled that representatives of Brewery X are the winners of the auction to acquire Modern Times with a bid of $20 million.
July 7: Briggs states that Brewery X has “elected not to complete the sale process” and that Maui, as the back-up bidder, will instead acquire Modern TImes. Modern Times CEO Garrett Marrero at the time declined to confirm the sale.
Update, June 27, 2022: On June 27, Judge John C. Gastelum of the Superior Court of California in Orange County ruled that representatives of Brewery X are the winners of the auction to acquire Modern Times with a bid of $20 million.
The judge’s order, reviewed by Good Beer Hunting, approved the receiver’s auction sale results initially announced June 17. This decision denies the objections of a rival bidder, MTD Asset Acquisition LLC, which on June 20 countered that it was the rightful auction winner. The sale must close no later than July 7.
Original coverage follows.
Update, June 20, 2022: Lawyers for MTD Asset Acquisition LLC (MTD) have filed an objection to the outcome of the June 17 auction in which Brewery X had a winning bid to acquire Modern Times. Brewbound reports MTD’s president is K. Bagby Taylor. Kurt Bagby Taylor is the founder and former CEO of Next Glass (parent company of Untappd, BeerAdvocate, and Hop Culture). George Taylor, CEO of Wilmington, North Carolina-based TRU Colors Brewery, is Bagby Taylor’s father. Court-appointed receiver Tom Hebrank referred to MTD as “TRU Colors” during a June 20 hearing.
In the court filing, MTD objects to the designation of Brewery X as the winning bid, arguing that it actually submitted a higher offer. A reportedly higher bid of $21 million would represent a $1 million increase over Brewery X’s $20 million bid.
During the June 20 hearing, Judge John C. Gastelum for the California Superior Court in Orange County said the court would review the complaint and additional documents. There is no timeframe for when a decision will be made.
A lawyer representing MTD in the hearing described the bidding process as “flawed” and “highly irregular.” They outlined just how strange they believed it to be, given a higher offer lost a bidding process:
MTD’s complaint alleges that a court-appointed receiver accepted MTD’s higher bid and designated it the winner.
But after conferring with “the company and two lenders in private,” the receiver then reversed course and designated Brewery X’s $20 million dollar bid the winner, despite its lower monetary offer.
The complaint states preference was given to the lower bid because of its shorter closing period, which MTD alleges is a violation of the auction’s stated terms.
Speaking during the hearing, Hebrank stated that the shorter closing period was critical because Modern Times is “out of money” and does not currently have funding to meet a $400,000 payroll next week.
Gastelum declined to rule on the complaint today, citing inadequate time to review all information. The judge stated that he had expected the June 20 hearing to be a “10-minute” affair to confirm the results of the auction, but was instead confronted with this “blow-up controversy.” He said he would need additional time to decide whether the result of the auction declaring Brewery X the winner “passes muster.”
The original story covering the auction of Modern Times follows.
THE GIST
During a June 17 auction of qualified bidders for San Diego’s Modern Times Beer, Anaheim, California’s Brewery X emerged as the winning bidder for $20 million. It was more than twice as much as an initial “stalking horse” bid made by Maui Brewing for a reported $7.62 million.
According to a source with knowledge of the proceedings, Brewery X beat out individuals associated with North Carolina-based TRU COLORS brewery in a back-and-forth bidding. Modern Times is being sold to resolve its financial receivership process, and will be acquired as a “going concern” rather than being liquidated.
According to Modern Times CEO Jennifer Briggs, the results of the auction will still need to be confirmed at a legal hearing on June 20. “They will be the winner of the auction pending final outcome of the hearing on Monday, and there will still be a transition period before the final closing,” Briggs said.
Brewery X opened in 2019 and according to an event listing on Facebook in partnership with the business, Brewery X originated from a project of University of Southern California's Master of Science in Entrepreneurship and Innovation program by 2018 alumni Paige Pennington, Carley Pennington, Clayton Wellbank, and Chris Pennington, father to Paige and Carley and owner of Rancho Cucamonga's Penwal Industries.
Trevor Walls, the company’s director of brewing operations, previously worked at California stalwarts Ballast Point Brewing, The Bruery, and Pizza Port Brewing. Brewery X most recently won a silver medal at this year's World Beer Cip in the American-Style India Pale Ale category for its Super Slap IPA.
Brewery X has spent freely to engrain itself in professional sports in its hometown, with bar/taproom spaces at the home stadiums for the NHL's Anaheim Ducks and MLB's Los Angeles Angels of Anaheim. It also manages a space at Ontario International Airport.
Briggs said Modern Times’ business has been going well recently, “which might seem ironic given our situation.”
In the 52-week sales period that ended on May 15 compared to the previous year, Modern Times’ portfolio was -23.7% in chain retail stores tracked by market research company IRI. Craft beer was -7.3%. The time period is tough for current sales because the previous year includes COVID-influenced purchases while many people were still at home and buying alcohol predominantly at stores.
More recently, retail sales show Modern Times’ portfolio increased dollar sales by +17% over four weeks from May 8 to June 5. But that was still behind beer overall, which had a baseline of an additional +25% dollar sales during that same time.
For comparison, Shelburne, Vermont’s Fiddlehead Brewing, the 49th-largest Brewers Association-defined craft brewery (Modern Times is 48th) made about $80,000 more than Modern times in the last month and grew at the same rate as beer.
This story will be updated as more details become available.
Words by Kate Bernot