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Molson announces $6B US merger deal with Coors

Last Updated Thu, 22 Jul 2004 06:45:38 EDT

MONTREAL - Molson Inc. (TSX:MOL.a)and Adolph Coors Co. announced Thursday they have agreed to a merger deal that will create a new brewing giant with $6 billion US in sales.

The new Molson Coors Brewing Company, created from Canada's largest brewer and the third biggest in the United States, would be the fifth biggest brewer in the world by volume of beer sold.

With an estimated brewing volume of 60 million hectolitres, the new company would still be dwarfed by the leading brewers, including global number 1 Anheuser-Busch and second-ranked SABMiller.

The deal ends the independence of two of North America's oldest family controlled beer companies. In an industry that has been rapidly consolidating in recent years, it appears the Coors and Molson families hoped the merger would allow them to retain key roles they would have been shut out of had the companies been sold to much larger brewers.

Molson chair Eric Molson becomes chair of the new combined company. Coors chief executive Leo Kiely will be the new company's CEO. Molson CEO Dan O'Neill is expected become the new firm's vice-chair.

"This transaction allows us to create a stronger company in a consolidating global industry while preserving Molson's rich heritage as North America's oldest beer company and Canada's leading brewer," said Eric Molson.

The two companies said the merger is expected to produce approximately $175 million US in annual savings by 2007. Half of those annual savings are expected to be realized within 18 months after the merger is completed.

The deal is structured as a share swap. Holders of Molson Class B voting shares get 0.126 of a voting share and 0.234 of a non-voting share of Molson Coors, while Molson Class A non-voting shares will convert into 0.360 of a non- voting share of Molson Coors.

Ahead of the announcement on Wednesday, shares of Molson fell 62 cents to $34.38 on the TSX, while shares of Coors fell $1.77 US to $74.74 US on the NYSE.

Molson announced the merger as it reported its quarterly financial results on Thursday. Coors is also reporting earnings Thursday.

Net profits for Molson fell 19.3 per cent to $68.3 million in the three months ended June 30, the first quarter of the company's 2005 fiscal year. Those results excluded special charges for restructuring and gains. Profits last year were $84.6 million.

Quarterly revenues were $675 million, up from $661.8 million, the company reported.

Written by CBC News Online staff

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I say we boycott Molson and Coors products in protest... if the Government is going to keep bailing out loosers like Air Canada and Bombardier, then why not one of our more treasured corporations... Molsons! How dare they sell out, just because their Brazillian division tanked (by a lot more than is measurable in hectoliters)! ::

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I've been doing that for years... Their beer tastes like ass...

I couldn't agree more. NO MORE ASS-TASTING BEER!

BWAHAHAHAHAHAHAHAHAHAHAHA!!!!!!!!!!!!!!!!!!!!!!!!!! ::

Chants from the peanut gallery could be heard... becoming more audible with every ululation...

"NO MORE ASS-TASTING BEER!!!!!!!!!" :: :: ::

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