memphiz
07-22-2004, 06:45 PM
http://us.news2.yimg.com/us.yimg.com/p/afp/20040722/capt.sge.pjs28.220704223348.photo00.default-292x384.jpg
The new look for the 'Coors Original' beer. Canada's Molson and US-based Coors announced plans for a 'merger of equals' creating the world's fifth largest brewer by volume.(AFP/Coors/HO)
MONTREAL (AFP) - Canada's Molson and US-based Coors announced plans for a "merger of equals" of the two family-controlled brewers creating the world's fifth largest beermaker by volume.
The deal "will create a new company with the operating scale and balance sheet strength to take a leading role in the consolidating global brewing industry," the companies said in a joint statement.
With combined beer production of 60 million hectoliters (51 million US barrels), the company to be named Molson Coors Brewing Company will be the world's fifth largest brewing company by volume, the statement said.
"This transaction allows us to create a stronger company in a consolidating global industry while preserving Molson's rich heritage as North America's oldest beer company and Canada's leading brewer," said Eric Molson, chairman of the Canadian firm.
The two firms are steeped in brewing history, with Montreal-based Molson, founded in 1786, as Canada's oldest brewer, while Coors dates its founding back to 1873, when Adolph Coors created the firm in Golden, Colorado.
Combined sales of the two firms were estimated at some six billion US dollars. The merger is expected to generate annual savings of some 175 million US dollars by 2007.
The only potential snag for the deal is whether one Molson family member will go along.
The Wall Street Journal reported that Ian Molson, cousin of the company chairman, was preparing his own bid worth some four billion US dollars.
The Journal also reported that a shareholder agreement between the two cousins, reached years ago, states that neither can sell or transfer shares without the approval of the other.
In a conference call, Coors and Molson executives declined to comment on an alternate bid, describing it as speculation.
Eric Molson added, "We're not in a selling mode. The company is not for sale. We like this transaction."
Both companies have been suffering in the face of consolidation and strong market-share gains by competitors, including Anheuser-Busch, SABMiller and Interbrew.
"Rather than shake our resolve, the reshaping of this industry has increased our resolve to participate in this consolidation, but on our own terms," Eric Molson told reporters and financial analysts.
Leo Kiely, chief executive at Coors and set to be CEO of the new company, said, "This merger gives us the operating scale ... to play a significant role in the global brewing business. It gives us the critical mass to be a real player in a rapidly consoldiating industry."
He noted that the firm, with more than 40 brands, would have a 43 percent market share in Canada, 21 percent of the British market and 11 percent in the United States and Brazil.
The combined company will have brands including Coors Light, Molson Canadian and Carling, the top brand in Britain.
Additionally, the companies have distribution or licensing agreements with other brewers, including Heineken, Grupo Modelo, Grolsch, FEMSA, Foster's and SABMiller.
The merger, which has been brewing for several days, has drawn mixed reactions from analysts.
"Given that Coors and Molson are already a combined entity since they operate two joint ventures, one in Canada and one in the US, we question, 'where is the value and/or cost savings/synergies?," Smith Barney analysts said in a note.
"However, long-term value could be created if the potential combination of Coors and Molson attracts a larger suitor, like Heineken or SABMiller."
But Goldman Sachs boosted its rating on Coors on Wednesday, saying "this could be a transformational deal" for the US firm.
The combined firm, as the number five global brewer "would derive most of its earnings from businesses with a number two market position," Goldman's Kelli Frederick said.
The new look for the 'Coors Original' beer. Canada's Molson and US-based Coors announced plans for a 'merger of equals' creating the world's fifth largest brewer by volume.(AFP/Coors/HO)
MONTREAL (AFP) - Canada's Molson and US-based Coors announced plans for a "merger of equals" of the two family-controlled brewers creating the world's fifth largest beermaker by volume.
The deal "will create a new company with the operating scale and balance sheet strength to take a leading role in the consolidating global brewing industry," the companies said in a joint statement.
With combined beer production of 60 million hectoliters (51 million US barrels), the company to be named Molson Coors Brewing Company will be the world's fifth largest brewing company by volume, the statement said.
"This transaction allows us to create a stronger company in a consolidating global industry while preserving Molson's rich heritage as North America's oldest beer company and Canada's leading brewer," said Eric Molson, chairman of the Canadian firm.
The two firms are steeped in brewing history, with Montreal-based Molson, founded in 1786, as Canada's oldest brewer, while Coors dates its founding back to 1873, when Adolph Coors created the firm in Golden, Colorado.
Combined sales of the two firms were estimated at some six billion US dollars. The merger is expected to generate annual savings of some 175 million US dollars by 2007.
The only potential snag for the deal is whether one Molson family member will go along.
The Wall Street Journal reported that Ian Molson, cousin of the company chairman, was preparing his own bid worth some four billion US dollars.
The Journal also reported that a shareholder agreement between the two cousins, reached years ago, states that neither can sell or transfer shares without the approval of the other.
In a conference call, Coors and Molson executives declined to comment on an alternate bid, describing it as speculation.
Eric Molson added, "We're not in a selling mode. The company is not for sale. We like this transaction."
Both companies have been suffering in the face of consolidation and strong market-share gains by competitors, including Anheuser-Busch, SABMiller and Interbrew.
"Rather than shake our resolve, the reshaping of this industry has increased our resolve to participate in this consolidation, but on our own terms," Eric Molson told reporters and financial analysts.
Leo Kiely, chief executive at Coors and set to be CEO of the new company, said, "This merger gives us the operating scale ... to play a significant role in the global brewing business. It gives us the critical mass to be a real player in a rapidly consoldiating industry."
He noted that the firm, with more than 40 brands, would have a 43 percent market share in Canada, 21 percent of the British market and 11 percent in the United States and Brazil.
The combined company will have brands including Coors Light, Molson Canadian and Carling, the top brand in Britain.
Additionally, the companies have distribution or licensing agreements with other brewers, including Heineken, Grupo Modelo, Grolsch, FEMSA, Foster's and SABMiller.
The merger, which has been brewing for several days, has drawn mixed reactions from analysts.
"Given that Coors and Molson are already a combined entity since they operate two joint ventures, one in Canada and one in the US, we question, 'where is the value and/or cost savings/synergies?," Smith Barney analysts said in a note.
"However, long-term value could be created if the potential combination of Coors and Molson attracts a larger suitor, like Heineken or SABMiller."
But Goldman Sachs boosted its rating on Coors on Wednesday, saying "this could be a transformational deal" for the US firm.
The combined firm, as the number five global brewer "would derive most of its earnings from businesses with a number two market position," Goldman's Kelli Frederick said.