Brewing powerhouses Coors and Molson to merge; combined company would rank fifth in world
Wednesday, July 21st 2004, 12:40 pm
By: News On 6
DENVER (AP) _ Adolph Coors Co., the third-biggest U.S. brewer, and Canadian brewer Molson Inc. announced plans Thursday to merge in a deal aimed at helping them compete against the world's beermaking giants.
The combined company, to be dubbed Molson Coors Brewing Co., would have annual revenues of about $6 billion and would rank fifth in the world by brewing volume, the companies said in a statement.
The deal, billed as a merger of equals, would combine family breweries each founded more than a century ago to market brands including Coors Original and Coors Light, Molson Canadian, Keystone and Carling.
Coors chief executive Leo Kiely would become CEO and Molson Chairman Eric Molson would become chairman.
Golden-based Coors is behind only Anheuser-Busch and Miller Brewing, while Montreal-based Molson is neck and neck with Interbrew S.A.'s Labatt Brewing in Canada.
The company will have executive headquarters in Denver and Montreal. U.S. operations will be managed from Golden, and Canadian operations from Toronto.
The deal is subject to approval by shareholders of both companies, with meetings expected in the fall, and also by regulators.
Analysts have been skeptical of the plan, 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.
``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,'' Coors chairman Peter H. Coors said. He is also a U.S. Senate hopeful.
``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.
Molson has shown signs of internal strife. Former deputy chairman Ian Molson, a cousin of Eric Molson, was among five directors not re-elected or replaced on the board in June. Some directors had hoped Ian Molson would eventually succeed Eric Molson as chairman.
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, a U.S. Senate candidate in Colorado.
In 2003, Coors reported net income of $174.6 million on sales of $4 billion. Volume was up 2.8 percent to 32.7 million barrels. By comparison, Anheuser-Busch, the nation's No. 1 beer company, earned $2.08 billion.
Montreal-based Molson reported a profit of about $181 million in 2003 on $1.91 billion in revenue.
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.
Besides its Golden headquarters, Coors has a second brewery in Memphis, Tenn., and a packaging facility near Elkton, Va. Molson has operations in Canada, Brazil and the United States.