Coors, Molson in talks

By Sandy Shore
Associated Press

Canadian brewing giant Molson Inc. and Adolph Coors Co., the No. 3 brewer in the United States, said an announcement could be made soon about a merger. The two were in advanced talks yesterday. Associated Press

In a statement issued after the markets closed, the two brewers said an announcement could be made soon. Under the proposal, Molson Chairman Eric Molson would become chairman and Coors chief executive officer Leo Kiely would become CEO of the combined company.

The companies provided few other details and said they would not make additional comments pending an agreement. Officials at both brewers did not return calls for comment yesterday.

The combined company would have about $6 billion in revenue, said Benj Steinman of Beer Marketer's Insight Inc.

He noted, however, that both companies have issues to resolve in their home markets. For example, Coors Light is about three-fourths of the company's business in the United States despite a variety of other products. Meanwhile, Molson's market share in Canada has been dwindling, he said.

Other analysts noted the two brewers already distribute each other's products in their respective countries.

"You put these two companies together, you don't get a company that is significantly more powerful with significantly greater growth opportunities," said Karim Salamatian, a BMO Nesbitt Burns analyst who tracks Molson. "This is not the deal for Molson shareholders to generate significant shareholder value."

Harry Schuhmacher, editor and publisher of Beer Business Daily, said he thought the deal was a good one, but not great.

"It takes them to a new level they currently can't get to on their own because they're too small," he said.

Today, Coors has a second brewery in Memphis, Tenn., and a packaging facility near Elkton, Va. Former chairman Peter Coors is seeking the Republican nomination for the U.S. Senate in Colorado's Aug. 10 primary. He is on an unpaid leave of absence pending the outcome of the campaign.

In 2003, Coors reported net income of $174.6 million, or $4.77 per share, on sales of $4 billion. By contrast, the world's largest brewer, Anheuser-Busch, earned $2.08 billion, or $2.48 a share, on $14.1 billion in revenue last year.

Montreal-based Molson has operations in Canada, Brazil and the United States.

Coors shares closed up $2.54, or more than 3 percent, at $75.56 yesterday on the New York Stock Exchange.