DENVER -- Adolph Coors Co., the third biggest U.S. brewer, and Canadian brewer Molson Inc. announced plans to merge Thursday in a deal to create a North American brewing giant to compete against the world's beermaking titans.
The combined company created by the deal, which was described as a merger of equals, would have annual revenues of about $6 billion and would rank fifth in the world by brewing volume, the companies said in a statement.
It will be known as Molson Coors Brewing Co., and will market brands like Coors Original and Coors Light, Molson Canadian, Keystone and Carling.
The deal would merge two family-led breweries both founded more than a century ago. Golden-based Coors trails Anheuser-Busch and SABMiller in the U.S. brewing business, while Montreal-based Molson is neck-and-neck with Interbrew SA's Labatt Brewing in Canada.
"I am very proud to see the company started by my great-grandfather more than 130 years ago combine with a company of Molson's caliber and heritage," said Coors chairman Peter H. Coors, who is running for the U.S. Senate from Colorado.
"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," Eric Molson said in a statement.
The deal is subject to approval by shareholders of both companies with meetings expected in the fall and also by regulators.
A former Molson executive could create a possible hitch in the plans. The Wall Street Journal reported Thursday that former Molson deputy chairman Ian Molson was expected to make an offer in the near future to acquire the company for as much as $4 billion. The offer would value the stock at about $30 a share, which would create a premium of more than 30 percent of the stock price before the merger was announced - something the Coors offer does not.
Ian Molson and his cousin, Eric Molson, the company's chairman, have clashed about the brewery. Ian Molson resigned from the board in May over disagreements with his cousin.
The Ian Molson offer would come from a group of investors and a possible corporate partner, the Journal said, citing sources close to the situation.
If the Coors-Molson deal goes through, Coors chief executive Leo Kiely would become CEO and Eric Molson would become chairman.
The company will have executive headquarters in Denver and Montreal. Its operations in Canada will be managed from Toronto, and its U.S. operations will be managed from Golden.
The plan calls for Coors shareholders to receive one share of Molson Coors for each share of Coors. Each Molson Class B share will be exchanged for a 0.126 voting share and 0.234 non-voting share of Molson Coors. Each Molson Class A share will be exchanged for 0.360 non-voting share of Molson Coors.
In a related development, Coors said today its net income dropped 5.6 percent to $72 million, or $1.90 per share, in the second quarter, citing a temporary reduction in the company's tax rate. Sales increased 4.6 percent to $1.15 billion.
Analysts have been skeptical of the rumored deal, saying they were uncertain how it would benefit the companies or save money. The U.S. market is flat and companies have begun working together to tap emerging markets overseas, particularly in China and South America.
But Coors and Molson said in Thursday's announcement that the combination should generate $175 million a year by 2007 in cost savings and new revenues.
In 2002, Molson acquired Kaiser in Brazil and Coors acquired the British Carling brands. Anheuser-Busch, SABMiller, Interbrew SA and others have been stepping up their stakes in Chinese brewers.
The new company will have a 15-member board, including five nominated by the Molson family board members, five by Coors family board members and three elected by the company's non-voting shareholders. Kiely and Daniel J. O'Neil, the Molson CEO who will be vice chairman of the combined company, will also be directors.
John Molson founded the company that bears his name in 1786. Coors was established in 1873 by Adolph Coors and Jacob Schueler. The voting stock in each is still controlled by descendants of the founders, who include Peter H. Coors.
On the Net:
Adolph Coors Co.: http://www.coors.com
Molson Inc.: http://www.molson.com
The Augusta Chronicle ©2012 Morris Communications, LLC. All Rights Reserved.
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