woodsy
10-09-2007, 12:23 PM
What is everyones take on this:
Molson Coors, SABMiller brew up $10-billion merger
JOHN PARTRIDGE
Tuesday, October 09, 2007
Molson Coors Brewing Co. shares foamed up to a healthy 11 per cent gain after the opening bell, courtesy of news that it and Anglo-South African brewer SABMiller Plc are merging their U.S. and Puerto Rican operations in a joint venture designed to compete more effectively with giant Anheuser Busch Cos Inc. which controls about 50 per cent of the market.
Molson's shares leapt $5.70 or 11.2 per cent to $56.53 (U.S.) on the New York Stock Exchange, while SABMiller was ahead 40 pence to 1,506 pence on the London Stock Exchange, having traded as high as 1,547 on then unconfirmed reports a deal was close.
The new U.S. joint venture, to be called MillerCoors, will bring together two of the most storied brand names in the U.S. beer business and the second and third largest beer makers in the United States, creating a company with about $6.6-billion (U.S.) in revenue and a combined value estimated at about $10-billion.
However, even with Miller's 19 per cent share of the U.S. market and Molson Coors's 11 per cent, the venture will remain a distant second to Anheuser Busch, with its marquee Budweiser and Bud Light brands.
Like the companies' other international operations, Molson Coors's Canadian operations, which already brew, distribute and market Miller beers under contract in Canada, are excluded from the deal and the Molson name will continue to be used in this country.
“It's business as usual in Canada,” Molson Coors spokesman Paul de la Plante said when reached at the Canadian head office in Montreal.
Molson Coors's Canadian and U.S. businesses will continue initiatives they have under way, such as integrating their North American supply chains “during the interim while we're waiting for this deal to be approved,” he said.
Mr. de la Plante dismissed the idea, however, that it make sense to go whole hog and roll the Canadian business into the new U.S. joint venture.
“Turning it all into one business is, I would think, highly unlikely,” he said. “I don't see that as being in the cards.”
Canada is a “very strong business in its own right,” he said, adding that the Canadian unit is “already doing what we need to do in terms of finding ways to co-operate with the U.S. business.”
SABMiller, which has South African roots and a British registered office, will have a 58 per cent economic interest in the new company, reflecting its larger size, and Denver-based Molson Coors the remaining 42 per cent. However, the two companies will each have a 50 per cent voting interest in the venture.
“Given the highly complementary nature of our U.S. assets, operations and geographic footprint, this is a logical and compelling combination that we expect will create significant value for shareholders while benefiting distributors, consumers, retailers and the market overall,” SABMiller chief executive officer Graham Mackay said in a news release.
Molson Coors vice-chairman Pete Coors said the transaction is driven by “profound changes” in the U.S. alcohol beverage market, where consumers are increasingly looking for greater choice, wine and spirits companies are making inroads on “traditional beer occasions,” and global beer importers and craft brewers are both taking larger market shares.
“Creating a stronger U.S. brewer will help us meet these challenges, compete more effectively and provide U.S. consumers with more choice, greater product availability and increased innovation,” he said.
Molson Coors chief executive Leo Kiely will head the joint venture as CEO while Miller's U.S. CEO, Tom Long, will be its president and chief commercial officer.
The two companies said that once the transaction is completed, they plan to enter a standstill agreement that would preclude either one from making an unsolicited offer for the other's shares for the next 10 years.
They also said each company will have the right of first offer and last refusal in the event the other wishes to sell its interest in the joint venture “after an initial no-sale period of five years.”
As well, if either company agrees before Dec. 31, 2008, to take part in a competing transaction proposed by a third party, it will have to pay the other a break-up fee of $150-million.
The joint venture must be approved by U.S. competition authorities, as well as by the majority of holders of Molson Coors's class A and exchangeable shares — the latter considered a sure thing given that the majority of these shares are controlled by the Molson and Coors families.
The two companies figure the joint venture will bring $500-million a year in costs savings by third full year of operations.
On a pro forma basis, the new venture's revenue for 2007 would include $3.9-billion from Miller and $2.7-billion from Molson Coors. Miller would account for $484-million of its $842-million in earnings before interest, taxes, depreciation and amortization, with Molson Coors kicking in the remaining $358-million.
© The Globe and Mail
Molson Coors, SABMiller brew up $10-billion merger
JOHN PARTRIDGE
Tuesday, October 09, 2007
Molson Coors Brewing Co. shares foamed up to a healthy 11 per cent gain after the opening bell, courtesy of news that it and Anglo-South African brewer SABMiller Plc are merging their U.S. and Puerto Rican operations in a joint venture designed to compete more effectively with giant Anheuser Busch Cos Inc. which controls about 50 per cent of the market.
Molson's shares leapt $5.70 or 11.2 per cent to $56.53 (U.S.) on the New York Stock Exchange, while SABMiller was ahead 40 pence to 1,506 pence on the London Stock Exchange, having traded as high as 1,547 on then unconfirmed reports a deal was close.
The new U.S. joint venture, to be called MillerCoors, will bring together two of the most storied brand names in the U.S. beer business and the second and third largest beer makers in the United States, creating a company with about $6.6-billion (U.S.) in revenue and a combined value estimated at about $10-billion.
However, even with Miller's 19 per cent share of the U.S. market and Molson Coors's 11 per cent, the venture will remain a distant second to Anheuser Busch, with its marquee Budweiser and Bud Light brands.
Like the companies' other international operations, Molson Coors's Canadian operations, which already brew, distribute and market Miller beers under contract in Canada, are excluded from the deal and the Molson name will continue to be used in this country.
“It's business as usual in Canada,” Molson Coors spokesman Paul de la Plante said when reached at the Canadian head office in Montreal.
Molson Coors's Canadian and U.S. businesses will continue initiatives they have under way, such as integrating their North American supply chains “during the interim while we're waiting for this deal to be approved,” he said.
Mr. de la Plante dismissed the idea, however, that it make sense to go whole hog and roll the Canadian business into the new U.S. joint venture.
“Turning it all into one business is, I would think, highly unlikely,” he said. “I don't see that as being in the cards.”
Canada is a “very strong business in its own right,” he said, adding that the Canadian unit is “already doing what we need to do in terms of finding ways to co-operate with the U.S. business.”
SABMiller, which has South African roots and a British registered office, will have a 58 per cent economic interest in the new company, reflecting its larger size, and Denver-based Molson Coors the remaining 42 per cent. However, the two companies will each have a 50 per cent voting interest in the venture.
“Given the highly complementary nature of our U.S. assets, operations and geographic footprint, this is a logical and compelling combination that we expect will create significant value for shareholders while benefiting distributors, consumers, retailers and the market overall,” SABMiller chief executive officer Graham Mackay said in a news release.
Molson Coors vice-chairman Pete Coors said the transaction is driven by “profound changes” in the U.S. alcohol beverage market, where consumers are increasingly looking for greater choice, wine and spirits companies are making inroads on “traditional beer occasions,” and global beer importers and craft brewers are both taking larger market shares.
“Creating a stronger U.S. brewer will help us meet these challenges, compete more effectively and provide U.S. consumers with more choice, greater product availability and increased innovation,” he said.
Molson Coors chief executive Leo Kiely will head the joint venture as CEO while Miller's U.S. CEO, Tom Long, will be its president and chief commercial officer.
The two companies said that once the transaction is completed, they plan to enter a standstill agreement that would preclude either one from making an unsolicited offer for the other's shares for the next 10 years.
They also said each company will have the right of first offer and last refusal in the event the other wishes to sell its interest in the joint venture “after an initial no-sale period of five years.”
As well, if either company agrees before Dec. 31, 2008, to take part in a competing transaction proposed by a third party, it will have to pay the other a break-up fee of $150-million.
The joint venture must be approved by U.S. competition authorities, as well as by the majority of holders of Molson Coors's class A and exchangeable shares — the latter considered a sure thing given that the majority of these shares are controlled by the Molson and Coors families.
The two companies figure the joint venture will bring $500-million a year in costs savings by third full year of operations.
On a pro forma basis, the new venture's revenue for 2007 would include $3.9-billion from Miller and $2.7-billion from Molson Coors. Miller would account for $484-million of its $842-million in earnings before interest, taxes, depreciation and amortization, with Molson Coors kicking in the remaining $358-million.
© The Globe and Mail