In an attempt to remove potential regulatory hurdles in the acquisition of Craft Brew Alliance (CBA) by Anheuser-Busch InBev (AB-InBev), the two companies have proposed the sale of Kona Brewing Co.’s operations in Hawaii to PV Brewing Partners.

Last November, AB-InBev agreed to acquire the remaining shares of CBA that it did not already own. But now the two companies have updated their agreement in order to “expedite the regulatory review process and alleviate potential regulatory concerns.”

The deal with PV Brewing includes Kona’s new brewery and its two brewpubs but only allows PV Brewing to sell their beers within the state of Hawaii. CBA and AB-InBev would continue to produce and sell the brand elsewhere in the United States and internationally.

According to an 8K filing with the U.S. Securities and Exchange Commission, PV Partners will pay $16 million for Kona’s Hawaii operations with $5 million due upon closing.

The sale to PV Brewing is contingent on the closing of the acquistion of CBA by AB-InBev.

Due to Kona’s sizable market share within Hawaii and AB-InBev’s distributing prowess, it was deemed necessary to sell Kona’s operations within the state to avoid an antitrust challenge of the merger from the U.S. Department of Justice. The DOJ already asked for a second look at the proposed merger.

“While our shared vision for the expanded partnership between CBA and A-B did include CBA’s Hawaii operations, we are still optimistic about the ability of CBA and A-B to offer more consumers, in more communities, even more choices as a result of this expanded partnership,” said Marcelo “Mika” Michaelis, president, Brewers Collective, AB-InBev, in a press release. “We are confident that PV Brewing will continue investing and driving economic growth in Kona’s communities in Hawaii.”

In Hawaii, Kona Brewing will be opening a 30,000 sq. ft. brewery and canning operation this year as the next step for its vibrant and local lifestyle brand.

“In the same way that CBA carried on the legacy of what Cameron Healy and Spoon Khalsa built at Kona, our number one priority is supporting Kona’s future on the Islands and ensuring the success of the brand there,” said Dave Peacock, PV Brewing Investor. “We are energized by this unique opportunity and are proud to support the continued growth of Kona in Hawaii with a new state-of-the-art brewery.”

The move by CBA and AB-InBev to divest themselves of Kona’s Hawaii operations isn’t exactly unprecedented. Labatt Brewing Company is owned by AB-InBev in Canada but is sold in the U.S. by FIFCO USA. South of the Border, Grupo Modelo and its Corona brand are owned by AB-InBev in Mexico but are sold in the U.S. by Constellation Brands. CBA already has a similar deal in place with Cisco Brewers. While CBA owns the brand elsewhere, the brewery’s original partners own the brewpub on Nantucket Island and sell the brand in Massachusetts.

ABOUT PV BREWING PARTNERS

PV Brewing is a firm formed by David Peacock and VantEdge Partners, an investment firm based in Kansas City led by Paul Edgerley and Terry Matlack. VantEdge, among other investments, owns 260 quick-serve restaurants, including Dunkin’, Taco Bell and Jamba and is part of the investment group that owns the Kansas City Royals. Mr. Peacock, former President of Anheuser-Busch, has partnered with VantEdge in other business ventures.