HEIO Heineken Holdings

MillerCoors LLC said Thursday it is beefing up its craft-beer portfolio by acquiring its first craft brewery, Saint Archer Brewing Co. of San Diego.

The second-largest brewer in the U.S. by market share after Anheuser-Busch InBev NV declined to disclose financial terms.

Saint Archer expects to sell 35,000 barrels of beer this year. Recent acquisitions have valued craft brewers at more than $1,000 a barrel, which would value the San Diego brewery at more than $35 million.

The deal, which is expected to close next month, is the latest in a series of craft-brewery acquisitions by global beer giants. Heineken NV this week said it is taking a 50% stake in Lagunitas Brewing Co., the sixth-largest independent brewer in the U.S., and Anheuser-Busch InBev NV has bought four craft breweries since 2011.

The spate of acquisitions have been driven by craft beer's growth in the U.S. Sales of lagers and light beer like Budweiser and Coors Light have declined as consumers increasingly opt for the more flavorful India Pale Ales and porters made by craft breweries. Craft's share of the U.S. beer market rose to 9% last year from 3% in 2003, while share for mainstream beers like Budweiser and Miller Lite collectively fell to 77% from 86% over the same period, according to industry tracker Beer Marketer's Insights.

MillerCoors, a joint venture between SAB Miller PLC and Molson Coors Brewing Co., took a minority stake in Terrapin Beer Co. of Athens, Ga. in 2011 but had been reluctant to acquire a craft brewer because of the high valuation price the breweries command. It found Saint Archer appealing because the brewer is located in a strong craft-beer market, has a leading India Pale Ale known as Saint Archer IPA and has no distribution outside California, which will allow MillerCoors to spread it across its network of distributors nationwide.

"How and when we get to the East Coast remains to be seen, but we will extend the brand across the country," said Pete Marino, MillerCoors spokesman.

Founded in 2013, Saint Archer will continue to operate independently and manage its own brewing, packaging and shipping. It will be a part of MillerCoors Tenth and Blake division, which also includes Blue Moon Brewing Co., Jacob Leinenkugel Brewing Co., Crispin Cider Co. and Terrapin.

There is no legal definition for a craft brewery. The Brewers Association defines it as a brewery that produces less than six million barrels of beer and is less than 25% owned or controlled by a larger brewer.

Write to Tripp Mickle at Tripp.Mickle@wsj.com

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(END) Dow Jones Newswires

September 10, 2015 14:05 ET (18:05 GMT)

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