On May 8, 2019, the Company entered into definitive agreements to acquire all of the equity interests held by certain private entities in Dogfish Head Brewery (“Dogfish Head”) and various related operations. In accordance with these agreements, the Company made a payment of $158.4 million, which was placed in escrow pending the satisfaction of certain closing conditions. This amount is recorded as Merger Consideration in the accompanying balance sheet at June 29, 2019. The Company closed the transaction on July 3, 2019, for total consideration of $336.0 million, consisting of $173.0 million in cash and 429,292 shares of restricted Class A Stock that had an aggregate market value as of July 3, 2019 of $163.0 million, after taking into account a post-closing cash related adjustment. As required under the definitive agreements, 127,146 of the 429,292 shares of restricted Class A Stock have been placed in escrow and will be released no later than July 3, 2029. These shares had a market value on July 3, 2019 of $48.3 million. The timing of the release of these escrowed shares is primarily related to the continued employment with the Company of Samuel A. Calagione III, one of the two Dogfish Head founders. As part of the transaction, distribution rights to the Dogfish Head brand outside of the United States and Canada were retained by the Dogfish Head founders.

The fair value of the transaction less cash acquired is estimated at approximately $323.8 million. The Company estimates that transaction-related and other non-recurring costs incurred and to be incurred as a result of the transaction will total approximately $8.0 million. Of this total, $1.5 million had been expensed as of June 29, 2019. As part of the transaction, certain members of Dogfish Head management entered into employment agreements with the Company and were granted 906 shares of restricted stock units that vest in one year and have a fair value of approximately $345,000. The Company funded the cash component of the transaction through cash on-hand and its existing line of credit as described in Note K.

The Company will consolidate Dogfish Head results into the Company’s financial results beginning on July 3, 2019. As part of the merger transaction, the Company expects to record assets and liabilities during the third quarter of 2019 which include the Dogfish Head Brewery, brand name and related intellectual property, inventory, other working capital assets and liabilities, deferred income taxes and goodwill. The combination of the Company and Dogfish Head creates a diverse multi-brand portfolio supported by significant brewing and sales expertise. The Company will account for the merger with Dogfish Head under the acquisition method of accounting for business combinations. Accordingly, the consideration will be allocated to the underlying net assets based on their respective fair values. The excess of the consideration over the estimated fair value of the net assets acquired will be recorded as goodwill.

Consistent with prior periods and considering post-merger reporting structures the Company will continue to report as one segment. All of the combined Company’s brands sell predominantly low alcohol beverages, which are sold to the same types of customers in similar size quantities at similar price points and through the same channels of distribution. These beverages are manufactured using similar production processes, have comparable alcohol content and generally fall under the same regulatory environment.