yudansha
TheGreatOne
People have mixed feelings about this... It still won't make me like this beer...
I still say that Heineken is the best beer all around!
Molson announces merger with Adolph Coors Co. to form new beer giant
MONTREAL (CP) - Canada's largest brewer has agreed to join forces with another family run brewing icon in the United States to create the Molson Coors Brewing Co., the world's fifth largest beer producer with $6 billion US in annual revenues.
"We stand firm in our belief that Molson, as a Canadian icon, has to continue to grow and build on its rich, longstanding brewing heritage and the enduring commitment and loyalty that Canadians have always shown towards our company and products," chairman Eric Molson told a New York news conference after his company and Adolph Coors Co. announced the "merger of equals."
"As the Molson founding family, the Molsons have been long-term investors in the company. We aren't interested in exiting the business, rather the family wants to play a role in building a major global brewer and deriving greater value for our shareholders."
The combined company would have annual revenues of about $6 billion US and rank fifth in the world by brewing volume. It would sell brands like Molson Canadian, Molson Dry, Coors Original and Coors Light, Keystone and Carling as well as Brazilian beers Bavaria and Kaiser.
The deal would merge one of Canada's oldest companies, Montreal-based Molson, which was founded in 1786, with Golden, Colo.-based Coors, founded in 1873. Coors trails Anheuser-Busch and SABMiller in the U.S. brewing business, while Molson is slightly bigger than Labatt Brewing, its chief Canadian rival based in Toronto.
The transaction would require approval of two-thirds of each class of Molson shareholders. The Molson family owns 55 per cent of the voting stock. It would also require majority approval of each class of Coors stockholders.
"This is a great step forward for us," said Eric Molson. "This is a brewing tradition and a national icon that will continue to forge ahead and this step is of great benefit to all our shareholders and for our country. We are taking a Canadian company and building it into another level."
The company, to be headquartered in Montreal and Denver, Colo., expects to save $175 million US annually in efficiencies by consolidating its operations. Half the savings are expected to come in the first 18 months.
An anticipated $700 million US in free cash flow will allow the new company to enhance the performance of its brands, expand and improve profits.
"The exciting part comes from harnessing the power of a company that will overnight essentially double in size and have the capacity to support aggressive and creative marketing campaigns, innovative product innovations and geographic expansion, all focussed on driving growth and getting value," Coors chairman Peter Coors told the news conference.
The deal, which had been rumoured to be near completion for days, had mixed effect on the shares of the companies.
Molson (TSX:MOL.A) stock traded up $1.13, or 3.3 per cent, at $35.84 on the Toronto stock market while Coors (NYSE:RKY) was down $1.47, or 1.97 per cent, at $73.26 US on the New York Stock Exchange.
While the Molson-Coors merger would be difficult to overturn, there could be rival bids for either of the two companies.
The Wall Street Journal reported Thursday that former Molson deputy chairman Ian Molson - Eric Molson's cousin - was expected to make an offer to acquire the Canadian brewer for as much as $4 billion US, more than 30 per cent above the per share value of the Coors deal.
The Molsons clashed about the future direction of the brewing company and Ian Molson, who controls about 10 per cent of Molson's voting shares - resigned from the board in May.
The Ian Molson-led offer would come from a group of investors and a possible corporate partner, the Journal reported, citing sources close to the company.
Molson Inc. revealed the structure of the deal when it reported financial results early Thursday.
"The transaction is structured as a share exchange whereby Molson Inc. shareholders can either convert their shares to shares of the new entity or can elect to receive exchangeable shares on a tax deferred basis," Molson said.
Thursday's merger continues a wave of consolidation in the global beer industry that has seen U.S. and European brewers get bigger to grow more rapidly in an increasingly competitive international market.
It also means that Canada's two major brewers, whose various beers and licensed brands account for nearly nine in 10 bottles of beer sold in this country - will effectively be foreign owned. Molson's rival Labatt is controlled by Belgian beer giant Interbrew.
For Molson, the merger with Coors should expand its markets in the United States and help improve the company's financial fortunes, which have been hurt by an ill-fated 2002 expansion into Brazil and flat beer sales in Canada.
Some analysts speculated that Coors and Molson may decide to divest the trouble-plagued Brazilian operation.
Earlier Thursday, Molson reported that excluding special charges for restructuring and gains, net profits fell 19.3 per cent to $68.3 million in the three months ended June 30, the first quarter of the company's 2005 fiscal year. That was down from profits of $84.6 million last year.
Meanwhile, total Molson beer sales volume fell 3.4 per cent, including 2.8 per cent in Canada and 4.2 per cent in Brazil.
Quarterly revenues rose to $675 million from $661.8 million, the company reported.
In a separate financial report, Coors said its second quarter net profit fell 5.6 per cent to $72 million US, while sales rose 4.6 per cent to $1.15 billion US.
As part of the transaction, Molson chairman Eric Molson would become chairman of the combined company, while Leo Kiely, chief executive of Coors, would become the new company's chief.
O'Neill was named vice-chairman of synergies and integration, and Timothy Wolf, currently chief financial officer of Coors, will be the chief financial officer of the combined company.
The company will have executive headquarters in Denver and Montreal, with its Canadian operations managed from Toronto and its U.S. operations from Golden, Colo.
The transaction comes after days of speculation among investors that an interloper like Heineken would emerge to break up the deal and try to steal Molson.
Most analysts have questioned the value of the deal, noting the companies already have agreements to sell each other's products in their respective countries.
Sales of Coors through Molson account for nearly a quarter of the company's earnings.
"They'll come up with some synergies. Whether the market believes they are attainable or achievable is another thing," said CIBC World Markets analyst Michael Van Aelst.
"I don't see any long-term strategic benefits to this transaction at all."
By combining, Coors and Molson would still remain a distant No. 5 in market share, and it is unclear whether the transaction would give the combined company enough heft to stave off increasing competition, analysts told the New York Times.
Anheuser-Busch, the maker of Budweiser, is No. 1, with nearly 50 per cent of the American beer market and SABMiller, the maker of Miller beer, is second, with 18.4 per cent. Coors has 10.8 per cent, while Molson has less than half of one per cent.
The deal appears to be motivated, in part, by the interests of both the Coors and Molson families to retain important roles in the combined company rather than sell out to a bigger brewery like Anheuser-Busch.
It also comes amidst internal strife within each company.
Former deputy chairman Ian Molson and several other directors resigned earlier this year while Peter Coors, the fourth generation of the Coors family to head the company, said in April he was taking a leave as chairman to seek the Republican nomination for the Senate in Colorado.
ROSS MAROWITS; © The Canadian Press, 2004
I still say that Heineken is the best beer all around!
Molson announces merger with Adolph Coors Co. to form new beer giant
MONTREAL (CP) - Canada's largest brewer has agreed to join forces with another family run brewing icon in the United States to create the Molson Coors Brewing Co., the world's fifth largest beer producer with $6 billion US in annual revenues.
A store worker walks past cases of Coors and Molson beer at a store in Toronto. (CP/Adrian Wyld)
"We stand firm in our belief that Molson, as a Canadian icon, has to continue to grow and build on its rich, longstanding brewing heritage and the enduring commitment and loyalty that Canadians have always shown towards our company and products," chairman Eric Molson told a New York news conference after his company and Adolph Coors Co. announced the "merger of equals."
"As the Molson founding family, the Molsons have been long-term investors in the company. We aren't interested in exiting the business, rather the family wants to play a role in building a major global brewer and deriving greater value for our shareholders."
The combined company would have annual revenues of about $6 billion US and rank fifth in the world by brewing volume. It would sell brands like Molson Canadian, Molson Dry, Coors Original and Coors Light, Keystone and Carling as well as Brazilian beers Bavaria and Kaiser.
The deal would merge one of Canada's oldest companies, Montreal-based Molson, which was founded in 1786, with Golden, Colo.-based Coors, founded in 1873. Coors trails Anheuser-Busch and SABMiller in the U.S. brewing business, while Molson is slightly bigger than Labatt Brewing, its chief Canadian rival based in Toronto.
The transaction would require approval of two-thirds of each class of Molson shareholders. The Molson family owns 55 per cent of the voting stock. It would also require majority approval of each class of Coors stockholders.
"This is a great step forward for us," said Eric Molson. "This is a brewing tradition and a national icon that will continue to forge ahead and this step is of great benefit to all our shareholders and for our country. We are taking a Canadian company and building it into another level."
The company, to be headquartered in Montreal and Denver, Colo., expects to save $175 million US annually in efficiencies by consolidating its operations. Half the savings are expected to come in the first 18 months.
An anticipated $700 million US in free cash flow will allow the new company to enhance the performance of its brands, expand and improve profits.
"The exciting part comes from harnessing the power of a company that will overnight essentially double in size and have the capacity to support aggressive and creative marketing campaigns, innovative product innovations and geographic expansion, all focussed on driving growth and getting value," Coors chairman Peter Coors told the news conference.
The deal, which had been rumoured to be near completion for days, had mixed effect on the shares of the companies.
Molson (TSX:MOL.A) stock traded up $1.13, or 3.3 per cent, at $35.84 on the Toronto stock market while Coors (NYSE:RKY) was down $1.47, or 1.97 per cent, at $73.26 US on the New York Stock Exchange.
While the Molson-Coors merger would be difficult to overturn, there could be rival bids for either of the two companies.
The Wall Street Journal reported Thursday that former Molson deputy chairman Ian Molson - Eric Molson's cousin - was expected to make an offer to acquire the Canadian brewer for as much as $4 billion US, more than 30 per cent above the per share value of the Coors deal.
The Molsons clashed about the future direction of the brewing company and Ian Molson, who controls about 10 per cent of Molson's voting shares - resigned from the board in May.
The Ian Molson-led offer would come from a group of investors and a possible corporate partner, the Journal reported, citing sources close to the company.
Molson Inc. revealed the structure of the deal when it reported financial results early Thursday.
"The transaction is structured as a share exchange whereby Molson Inc. shareholders can either convert their shares to shares of the new entity or can elect to receive exchangeable shares on a tax deferred basis," Molson said.
Thursday's merger continues a wave of consolidation in the global beer industry that has seen U.S. and European brewers get bigger to grow more rapidly in an increasingly competitive international market.
It also means that Canada's two major brewers, whose various beers and licensed brands account for nearly nine in 10 bottles of beer sold in this country - will effectively be foreign owned. Molson's rival Labatt is controlled by Belgian beer giant Interbrew.
For Molson, the merger with Coors should expand its markets in the United States and help improve the company's financial fortunes, which have been hurt by an ill-fated 2002 expansion into Brazil and flat beer sales in Canada.
Some analysts speculated that Coors and Molson may decide to divest the trouble-plagued Brazilian operation.
Earlier Thursday, Molson reported that excluding special charges for restructuring and gains, net profits fell 19.3 per cent to $68.3 million in the three months ended June 30, the first quarter of the company's 2005 fiscal year. That was down from profits of $84.6 million last year.
Meanwhile, total Molson beer sales volume fell 3.4 per cent, including 2.8 per cent in Canada and 4.2 per cent in Brazil.
Quarterly revenues rose to $675 million from $661.8 million, the company reported.
In a separate financial report, Coors said its second quarter net profit fell 5.6 per cent to $72 million US, while sales rose 4.6 per cent to $1.15 billion US.
As part of the transaction, Molson chairman Eric Molson would become chairman of the combined company, while Leo Kiely, chief executive of Coors, would become the new company's chief.
O'Neill was named vice-chairman of synergies and integration, and Timothy Wolf, currently chief financial officer of Coors, will be the chief financial officer of the combined company.
The company will have executive headquarters in Denver and Montreal, with its Canadian operations managed from Toronto and its U.S. operations from Golden, Colo.
The transaction comes after days of speculation among investors that an interloper like Heineken would emerge to break up the deal and try to steal Molson.
Most analysts have questioned the value of the deal, noting the companies already have agreements to sell each other's products in their respective countries.
Sales of Coors through Molson account for nearly a quarter of the company's earnings.
"They'll come up with some synergies. Whether the market believes they are attainable or achievable is another thing," said CIBC World Markets analyst Michael Van Aelst.
"I don't see any long-term strategic benefits to this transaction at all."
By combining, Coors and Molson would still remain a distant No. 5 in market share, and it is unclear whether the transaction would give the combined company enough heft to stave off increasing competition, analysts told the New York Times.
Anheuser-Busch, the maker of Budweiser, is No. 1, with nearly 50 per cent of the American beer market and SABMiller, the maker of Miller beer, is second, with 18.4 per cent. Coors has 10.8 per cent, while Molson has less than half of one per cent.
The deal appears to be motivated, in part, by the interests of both the Coors and Molson families to retain important roles in the combined company rather than sell out to a bigger brewery like Anheuser-Busch.
It also comes amidst internal strife within each company.
Former deputy chairman Ian Molson and several other directors resigned earlier this year while Peter Coors, the fourth generation of the Coors family to head the company, said in April he was taking a leave as chairman to seek the Republican nomination for the Senate in Colorado.
ROSS MAROWITS; © The Canadian Press, 2004