Tiny suburban Chicago brewery Kings and Convicts stunned the beer industry Tuesday afternoon by announcing the acquisition of California’s legendary Ballast Point Brewing. Terms were not disclosed.

Ballast Point was famously bought for $1 billion four years ago by Constellation Brands, the Chicago-based beer company that owns the American rights to top Mexican brands that include Modelo, Corona and Pacifico. Ballast Point quickly became an albatross for Constellation, struggling to grow and adapt to its larger owners.

Multiple Ballast Point locations have closed or else been paused while in planning in recent years. The deal nets six Ballast Point locations for Kings and Convicts — five in California and a taproom in Chicago’s Fulton Market neighborhood.

Kings and Convicts co-founder and CEO Brendan Watters said the price was less than $1 billion, but declined to elaborate, citing details of the agreement.

“I don’t have that sort of cash lying around," he said.

The sale was as unlikely as it is unprecedented. Kings and Convicts, which opened in Highwood in 2017, is a tiny brewery unknown to most Chicago beer drinkers. It will make a mere 660 barrels of beer this year.

Ballast Point is one of the nation’s most recognizable brands, on pace to make about 200,000 barrels of beer this year.

Watters, who is in San Diego Tuesday to announce the deal to Ballast Point staff, said he told staff there not to worry about the fact they haven’t heard of Kings and Convicts.

“I said most people in Chicago don’t know us, either,” he said. “I think that that’s what makes it quite interesting.”

Brewery sales have become common since Anheuser-Busch bought Chicago’s Goose Island Beer Co., a deal that sparked an era of consolidation as large beer companies sought to get a piece of the growing craft beer industry.

Tuesday’s deal is a striking example of the opposite.

“This has been about the conglomerates buying up the independent breweries but we’re doing the opposite,” Watters said. “We’re saying, ‘Let’s bring it back to independence and innovation and see what happens.’"

Seeds of the deal were planted in July, when Watters golfed with someone he declined to name from Constellation Brands and asked the company’s plans for its foundering craft brand.

“I said what are you doing with Ballast Point?” Watters said. “They said, ‘Why?’ I said I wanted to buy it. It was as simple as that.”

He said Ballast Point was never formally shopped by Constellation so far as he knows, and that he and his partners had long admired the beer and the brand, even as it struggled in recent years.

Watters, a former hotel executive who sold his chain of Boomerang Hotels in 2015, said he recruited two new investors into Kings and Convicts to pull off the deal, which is expected to close in 2020. The investor group is now six people, including Watters and his partner Christopher Bradley. Watters declined to identify the rest of the investor group.

“Most of them love Ballast Point, but don’t want notoriety and want to remain quiet,” he said.

Ballast Point is distributed in 49 states. Watters said the brand will honor existing distribution contracts, but will focus efforts on core markets, including California, Illinois, Washington state and its international business. All existing Ballast Point facilities will remain open, he said, and sales, marketing and human resources staff — all gutted under Constellation — will be rebuilt, he said.

Despite its recent struggles, Watters said he believes the brand has plenty of upside. He wants to see Ballast Point “act like a small brewer again and see where it goes.”

“It’s really about focus,” he said. “We will build up a new Ballast Point sales force and let the innovation go and get back to the roots. I think it just needs some love and focus and it’ll be fine.”

Earlier this year, Kings and Convicts announced construction of an ambitious new brewery in Southern Wisconsin. Watters said Ballast Point beer would eventually be made at that location and Kings and Convicts beer would be brewed at Ballast Point’s San Diego location for export to his native Australia.

News of the sale sent baffled beer fans scrambling to the Kings and Convicts website Tuesday. The site quickly crashed.

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