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Modern Times sale: Brewery X drops out after winning auction

The winning bidder to acquire Modern Times Beer through a court-approved receivership auction has backed out of the deal — paving the way for backup bidder Maui Brewing Co. to move ahead with buying the well-known San Diego craft brewery for $15.3 million.

Modern Times confirmed Maui Brewing, which was designated as the second-place finisher during the auction held on June 17, was now stepping in to acquire the brewery.

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Maui replaces an affiliate of Anaheim-based Brewery X. It won the auction with a $20 million bid for Modern Times and planned to close the transaction by Friday.

But on July 1, Brewery X elected not to go forward with the sale, according to Modern Times. Efforts to reach Brewery X and Maui Brewing were unsuccessful.

“This was an unexpected development in this process,” said Jennifer Briggs, Modern Times chief executive in a statement. “I am looking forward to working with Maui Brewing Co. and finalizing the sale process and transitioning the business.”

Briggs said Modern Times employees and consultants worked with Brewery X representatives to attempt to meet the tight timeline for closing the deal.

“This last-minute change is abrupt, yet it gives us the opportunity to be even more methodical,” said Briggs. “It allows Maui Brewing Co. the time to finalize their acquisition process per their asset purchase agreement and how it will be additive to our craft brewing community.”

Maui, which was the stalking horse bidder in the auction, is expected to complete the transaction by October, according to Modern Times.

Stalking horse bidders are chosen by the court to set the floor price for an asset auction, which in this case was $7.62 million. Maui Brewing upped its bid to $15.3 million on June 17.

The nation’s 48th largest craft beer maker by volume, Modern Times was forced into receivership in March by Zions Bancorp. — its senior lender and the parent company of California Bank & Trust. The brewery fell behind on payments after an aggressive West Coast expansion was derailed by the pandemic.

Briggs, a former New Belgium Brewing executive, took over as CEO in January and moved to reduce costs, including closing brewpubs in Portland, Oakland, Santa Barbara and Los Angeles. The shutdowns resulted in the loss of about 70 jobs.

Modern Times still operates a production facility and brewpub in Point Loma, as well as its locations in North Park, Encinitas and Anaheim. Briggs said the brewery continues “to sell all of the beer we produce and are very grateful for our distribution partners, loyal drinkers, League members and visitors to our taprooms and restaurants.”

Based in Kihei, it ranks as the 43rd largest craft brewer in the nation based on beer production, according to the Brewer’s Association. Its products are distributed in more than 20 states, according to its website. It also makes hard seltzers, sodas, spirits and canned cocktails.

“Distressed sale processes often experience some turbulence, including on the buyer side,” said Paul Buie, managing director at Onyx Asset Advisors, which ran the sale process for receiver Thomas Hebrank. “Maui Brewing Co. has already done an extraordinary amount of due diligence as the stalking horse and the entire deal team, from the receiver to the Modern Times employees, is excited to continue working with Maui Brewing Co. on the court-approved sale.”