Merger Plans for North American Beer Companies

21 July 2004

A "merger of equals" is on the cards for two North American beer companies, Adolph Coors of the US and Canada's Molson. Coors' shareholders, however, could challenge the term 'equal.'

While a joint statement suggests the proposed combined company offers an equal division of labor -- Molson's chairman would be the new chairman, Coors's ceo the new ceo and Molson's ceo the new vice chairman -- Coors' public stockholders may argue that this is small compensation for a raw deal.

Many would favour a sale rather than a merger to guarantee a large premium. As both companies currently have a $3 billion (€2.4bn; £1.6bn) market capitalization, a merger would fail to provide a significant premium in either case.

Nevertheless, Coors' shares have taken a healthy turn, edging up by 9%, as all concerned await a formal announcement due "in the near future."

Data sourced from: The Wall Street Journal Online; additional content by WARC staff