Molson Coors Not A Done Deal, Yet

Discussion
Jul 23, 2004
George Anderson

By George Anderson


Although Molson and Adolph Coors announced plans to merge their businesses yesterday, there still remains the possibility the deal may not go through, reports The New York Times.


In-fighting within the Molson family as well as possible counteroffers from Heineken and the Toronto-based investment firm Onex could still scuttle the deal between the two brewers. The two companies have agreed not to seek outside offers.


Should the merger take place, current Molson shareholders will hold 55 percent of the merged business and Eric H. Molson will become its chairman.


The new entity to be known as Molson Coors will become the fifth largest brewer in the world. The two brewers currently generate approximately $6 billion (U.S) in annual sales combined.


Molson and Coors estimate that, by merging, Molson Coors can expect to reduce costs by $437.5 million over the next two and a half years


Michael Palmer, president of Veritas Investment Research in Toronto, isn’t sure the deal will do much to help the companies’ brands regain lost market share.


“Anheuser-Busch is not going to go away because Coors and Molson are merging,” he said.


Moderator’s Comment: What are your thoughts on the merger agreement announced by Molson and Coors?


Heineken has a Canadian distribution agreement with Molson, so don’t be surprised to see another deal once Molson Coors becomes a reality.


Although it could happen now, we don’t expect to see Heineken make a bid to replace Coors in this round of consolidation.


Down the line, a Molson Coors Heineken brewing company could be an international force to be reckoned with.
George Anderson – Moderator

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