07-23-2004, 12:42 AM
The link....
NEW YORK (Reuters) - Adolph Coors Co. and Canada's Molson Inc. on Thursday agreed to merge in a deal that would create the world's fifth-largest brewer by volume.
The deal's fate remained unclear, however, after a last-minute takeover offer Wednesday for Molson from Ian Molson, a one-time company deputy chairman who resigned in June after a falling out with Chairman Eric Molson, his cousin.
Under the Coors-Molson agreement, Molson shareholders would control about 55 percent of the combined company, which would remain largely in the hands of the Molson and Coors families.
The deal would help the companies compete against larger rivals, including Anheuser-Busch Cos. Inc. and SABMiller Plc, that have snatched up competitors around the globe over the past few years.
"The beer world is in a major consolidating phase," Coors Chief Executive Leo Kiely said an interview. "This allows the new company to be at the table with things that neither (Molson Chief Executive) Dan (O'Neill) nor I could be at the table with our independent companies. There's quite a bit of purchasing power here."
Coors and Molson, Canada's oldest brewer, said they had agreed not to solicit other offers and expected their deal to close this fall.
Molson shares rose C$1.00 to close at C$35.70 on the Toronto Stock Exchange, while Coors shares fell $2.33 to $72.40 on the New York Stock Exchange (news - web sites).
Ian Molson sent a letter Wednesday offering to acquire the 218-year-old Canadian beermaker for about $4 billion but provided no financing details, a source close to the situation said. That would values each Molson share at roughly C$40.81.
Molson Chief Executive Dan O'Neill said the company never received a firm bid from Ian Molson. He said the board received a letter requesting a meeting to discuss a possible offer, but the board unanimously decided to support the Coors deal.
The Ian Molson deal would be difficult to close since 67 percent of Molson's shareholders would have to sign off on it, and Eric Molson controls 55 percent of the company's stock.
Coors could also make a rival transaction difficult by pulling out of its existing joint venture with Molson, under which the companies sell each other's products in their home countries. The venture accounts for about 25 percent of Molson's profits.
Still, some industry bankers said Ian Molson, who did not return calls seeking comment, could gain support from enough outside Molson shareholders to prevent the Coors deal from achieving the 67 percent approval threshold.
His cause could be helped by the fact that his deal would offer a premium to Molson shareholders, as opposed to no premium in the Coors-Molson deal.
Under the Coors-Molson deal, the shares of both companies would be exchanged for shares in a new, combined company.
The merger is expected to produce $175 million in annual savings by 2007 and would boost earnings in the first year after closing, the companies said.
Both Coors and Molson reported disappointing earnings on Thursday and are struggling to gain share in an increasingly competitive global market. The combined company would hold a 43 percent share of the Canadian beer market and 11 percent of the U.S. market. It would be the world's No. 5 brewer by volume, behind industry leader Anheuser-Busch and SABMiller, Heineken and Interbrew.
Eric Molson would be chairman of the combined company, to be called Molson Coors Brewing Co. Kiely would be CEO.
Wall Street analysts have been skeptical about how a merger would benefit the companies.
"Given that Coors and Molson are already a combined entity since they operate two joint ventures, one in Canada and one in the United States, we question where is the value and/or cost savings/synergies," Smith Barney analyst Bonnie Herzog said in a research note.
Deutsche Bank advised Coors during the merger talks. Citigroup and BMO Nesbitt burns advised Molson, while Merrill Lynch advised the special committee of Molson board members.
NEW YORK (Reuters) - Adolph Coors Co. and Canada's Molson Inc. on Thursday agreed to merge in a deal that would create the world's fifth-largest brewer by volume.
The deal's fate remained unclear, however, after a last-minute takeover offer Wednesday for Molson from Ian Molson, a one-time company deputy chairman who resigned in June after a falling out with Chairman Eric Molson, his cousin.
Under the Coors-Molson agreement, Molson shareholders would control about 55 percent of the combined company, which would remain largely in the hands of the Molson and Coors families.
The deal would help the companies compete against larger rivals, including Anheuser-Busch Cos. Inc. and SABMiller Plc, that have snatched up competitors around the globe over the past few years.
"The beer world is in a major consolidating phase," Coors Chief Executive Leo Kiely said an interview. "This allows the new company to be at the table with things that neither (Molson Chief Executive) Dan (O'Neill) nor I could be at the table with our independent companies. There's quite a bit of purchasing power here."
Coors and Molson, Canada's oldest brewer, said they had agreed not to solicit other offers and expected their deal to close this fall.
Molson shares rose C$1.00 to close at C$35.70 on the Toronto Stock Exchange, while Coors shares fell $2.33 to $72.40 on the New York Stock Exchange (news - web sites).
Ian Molson sent a letter Wednesday offering to acquire the 218-year-old Canadian beermaker for about $4 billion but provided no financing details, a source close to the situation said. That would values each Molson share at roughly C$40.81.
Molson Chief Executive Dan O'Neill said the company never received a firm bid from Ian Molson. He said the board received a letter requesting a meeting to discuss a possible offer, but the board unanimously decided to support the Coors deal.
The Ian Molson deal would be difficult to close since 67 percent of Molson's shareholders would have to sign off on it, and Eric Molson controls 55 percent of the company's stock.
Coors could also make a rival transaction difficult by pulling out of its existing joint venture with Molson, under which the companies sell each other's products in their home countries. The venture accounts for about 25 percent of Molson's profits.
Still, some industry bankers said Ian Molson, who did not return calls seeking comment, could gain support from enough outside Molson shareholders to prevent the Coors deal from achieving the 67 percent approval threshold.
His cause could be helped by the fact that his deal would offer a premium to Molson shareholders, as opposed to no premium in the Coors-Molson deal.
Under the Coors-Molson deal, the shares of both companies would be exchanged for shares in a new, combined company.
The merger is expected to produce $175 million in annual savings by 2007 and would boost earnings in the first year after closing, the companies said.
Both Coors and Molson reported disappointing earnings on Thursday and are struggling to gain share in an increasingly competitive global market. The combined company would hold a 43 percent share of the Canadian beer market and 11 percent of the U.S. market. It would be the world's No. 5 brewer by volume, behind industry leader Anheuser-Busch and SABMiller, Heineken and Interbrew.
Eric Molson would be chairman of the combined company, to be called Molson Coors Brewing Co. Kiely would be CEO.
Wall Street analysts have been skeptical about how a merger would benefit the companies.
"Given that Coors and Molson are already a combined entity since they operate two joint ventures, one in Canada and one in the United States, we question where is the value and/or cost savings/synergies," Smith Barney analyst Bonnie Herzog said in a research note.
Deutsche Bank advised Coors during the merger talks. Citigroup and BMO Nesbitt burns advised Molson, while Merrill Lynch advised the special committee of Molson board members.
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