Lehigh brewery bought by Sam Adams maker

Boston Beer Company Inc., which makes Samuel Adams Boston Lager and other beers, said today that it agreed to pay $55 million to buy a brewery in Breinigsville, Lehigh County, from Diageo North America.

The company said that adding the brewery would increase its annual brewing capacity by 1.6 million barrels, and that it could eventually produce 2 million barrels a year - an increase that would more than double Boston Beer's current production.

Boston Beer shares were up $2.14, or 5.2 percent, to $43.20 in midday trading on the New York Stock Exchange.

In the fiscal year ended Dec. 30, 2006, Boston Beer said it sold 1,581,000 barrels of its 21 Sam Adams brands, and brewed an additional 31,000 barrels under contract for third parties. A barrel of beer is equivalent to about 330 12-ounce bottles.

Boston Beer said it hoped to close on the sale in late spring 2008. If the deal goes through as planned, the brewer said it would discontinue consideration of building a new brewery in Freetown, Mass.

Boston Beer said buying the brewery, which would complement its facilities in Boston and Cincinnati, "ensures adequate capacity for future growth." But it said the facility would require "substantial investment and renovation" to meet the company's needs.

Even so, it would not be the first time the Pennsylvania facility has brewed Sam Adams beers. When it was owned by Pabst Brewing Co. from 1994 to 2001, the facility produced Boston Lager and other Sam Adams brands under contract, said Michelle Sullivan, a Boston Beer spokeswoman.

Since its purchase by Diageo, the facility has turned to another segment of the alcoholic-drinks market: flavored malt beverages. A Diageo spokeswoman said the plant has produced Smirnoff Ice and Parrot Bay Tropical Malt Beverage.

Boston Beer said it had agreed to retain about 194 jobs at the facility, "many of which are held by long-term, experienced brewers who had worked at the brewery when Samuel Adams beers were brewed there previously."

Martin Roper, Boston Beer's president and chief executive officer, said the agreement "is a great opportunity to revitalize a classic brewery and restore its capability to brew our craft beers."