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Molson, Coors agree to $6-billion US merger
Ending days of brewing speculation, Molson Inc. and Adolph Coors Co. have announced a $6-billion US merger that they say will create the world's fifth largest brewer.
"This is a great step forward for us," Molson chairman Eric Molson said at a news conference with Coors in New York Thursday.
"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 new company will be called Molson Coors Brewing Co., and will create the fifth largest brewer in the world "as measured by volume of beer sold," Molson Inc. said in a statement, as it released its first quarter results for fiscal 2005.
"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 Inc. said in a statement.
The New York Times reported that the merger deal was reached late Wednesday.
The deal now means that Canada's two main brewers will be owned by foreigners. Labatt is owned by Belgium's Interbrew.
Coors, which was founded in 1873, is the third largest brewer in the United States, with 11 per cent of the market share. Molson was founded in 1786 and is Canada's leading brewer, with 43 per cent of the market share. It has an 11 per cent market share in Brazil, where it is the third largest brewer.
The family-controlled Molson has struggled in recent years, particularly since March 2002, when it bought Brazil's Kaiser, for $1.2 billion. Shortly after the purchase, Brazil's economy, currency and beer consumption sagged.
On Thursday, Molson reported that net profits fell 19.3 per cent to $68.3 million in the three months ending June 30, excluding special charges for restructuring and gains. That is down from profits of $84.6 million last year.
The brewer reported that total Molson beer volume was down 3.4 per cent. Volume in Canada was down 2.8 per cent, and 4.2 per cent in Brazil.
Molson has been shaken by a power struggle between chairman Eric Molson, 66, and his cousin Ian Molson, 49, who stepped down from his position as deputy chairman at the annual general meeting in June. The tensions are reportedly a result of Eric's refusal to give Ian more responsibility.
There were also reports that Ian Molson had been canvassing for another possible buyer.
Coors has also seen some internal strife. Peter H.S. Coors, the chairman of the Colorado-based brewery, has taken a leave from the company to pursue the Republican nomination for the Senate in Colorado.
The New York Times reported that he took a short break from his campaign Wednesday to participate in merger negotiations in New York.
"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 said in a statement.
Under the merger plan, Eric Molson is to become chairman of the combined company. Leo Kiely, chief executive officer of Coors, will become chief executive of the merged company.
Daniel J. O'Neill, currently chief executive officer of Molson, will be vice chairman, synergies and integration. Timothy V. Wolf, currently chief financial officer of Coors, will serve as chief financial officer of the combined company.
The merged company will have its executive headquarters in Denver and Montreal. Its Canadian operations will be managed from Toronto, and its U.S. operations from Golden, Colo. :lol:
Ending days of brewing speculation, Molson Inc. and Adolph Coors Co. have announced a $6-billion US merger that they say will create the world's fifth largest brewer.
"This is a great step forward for us," Molson chairman Eric Molson said at a news conference with Coors in New York Thursday.
"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 new company will be called Molson Coors Brewing Co., and will create the fifth largest brewer in the world "as measured by volume of beer sold," Molson Inc. said in a statement, as it released its first quarter results for fiscal 2005.
"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 Inc. said in a statement.
The New York Times reported that the merger deal was reached late Wednesday.
The deal now means that Canada's two main brewers will be owned by foreigners. Labatt is owned by Belgium's Interbrew.
Coors, which was founded in 1873, is the third largest brewer in the United States, with 11 per cent of the market share. Molson was founded in 1786 and is Canada's leading brewer, with 43 per cent of the market share. It has an 11 per cent market share in Brazil, where it is the third largest brewer.
The family-controlled Molson has struggled in recent years, particularly since March 2002, when it bought Brazil's Kaiser, for $1.2 billion. Shortly after the purchase, Brazil's economy, currency and beer consumption sagged.
On Thursday, Molson reported that net profits fell 19.3 per cent to $68.3 million in the three months ending June 30, excluding special charges for restructuring and gains. That is down from profits of $84.6 million last year.
The brewer reported that total Molson beer volume was down 3.4 per cent. Volume in Canada was down 2.8 per cent, and 4.2 per cent in Brazil.
Molson has been shaken by a power struggle between chairman Eric Molson, 66, and his cousin Ian Molson, 49, who stepped down from his position as deputy chairman at the annual general meeting in June. The tensions are reportedly a result of Eric's refusal to give Ian more responsibility.
There were also reports that Ian Molson had been canvassing for another possible buyer.
Coors has also seen some internal strife. Peter H.S. Coors, the chairman of the Colorado-based brewery, has taken a leave from the company to pursue the Republican nomination for the Senate in Colorado.
The New York Times reported that he took a short break from his campaign Wednesday to participate in merger negotiations in New York.
"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 said in a statement.
Under the merger plan, Eric Molson is to become chairman of the combined company. Leo Kiely, chief executive officer of Coors, will become chief executive of the merged company.
Daniel J. O'Neill, currently chief executive officer of Molson, will be vice chairman, synergies and integration. Timothy V. Wolf, currently chief financial officer of Coors, will serve as chief financial officer of the combined company.
The merged company will have its executive headquarters in Denver and Montreal. Its Canadian operations will be managed from Toronto, and its U.S. operations from Golden, Colo. :lol:
