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Coors, Molson Union to Create World #5 Brewer - Maybe?

News, 23 July 2004


Despite an official unveiling Thursday, plans to create the planet's fifth largest brewer could grind to a halt if a rebel sprig of the Molson family has his way.

As predicted [WAMN: 21-Jul-04], beer baronies Adolph Coors of the US and Molson of Canada announced their forthcoming nuptials amid a fanfare of publicity. The deal, if it goes through, will result in a unified company with a market capitalization of $US6 billion ($C7.88bn; €4.88bn; £3.25bn).

The new company will be renamed Molson Coors Brewing, with dual headquarters in the US and Canada. There will also be a twin stock market listing in New York and Toronto, fifty-fifty board representation and a diplomatic division of top management positions. Eric Molson will be chairman of the combined group with Coors ceo Leo Kiely, occupying the same role within the enlarged group.

But the couple's happiness ever after depends on the whim of a likely Bad Fairy at the Wedding -- Ian Molson, former deputy chairman of the eponymous brewer who quit the company in June after a family spat with chairman Eric.

Molson I wrote to Molson E on Wednesday, officially informing him of his plan to mount a $4bn offer for the Molson company -- outbidding by thirty percent the implied valuation of $3bn put on the nil-premium merger.

This spoiling tactic is believed unlikely to succeed as it needs the approval of the rest of the Molson clan -- but it could siphon-off support from other shareholders and act as a cold douche on the happy couple's ardour to consummate.

The bonding of the beer barons, if torpedoed, would incur a break-up fee of $75m, payable by the defaulting party. Eric Molson said yesterday it was "impossible to know" what his dissident cousin was planning.

And the lips of Eric the Wrecker remained zipped -- both to his estranged family and the press.

Data sourced from: Financial Times; additional content by WARC staff