July 24, 2004
Stiff Competition in Beer Market Leads Molson & Coors Merger to Create World’s Fifth Largest Brewer
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Canada's Molson and US-based Coors announced plans for a "merger of equals" of the two family-controlled brewers creating the world's fifth largest beermaker by volume.
The deal "will create a new company with the operating scale and balance sheet strength to take a leading role in the consolidating global brewing industry," the companies said in a joint statement.
With combined beer production of 60 million hectoliters (51 million US barrels), the company to be named Molson Coors Brewing Company will be the world's fifth largest brewing company by volume, the statement said.
"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, chairman of the Canadian firm.
What's the upside for shareholders? None really, since they're already effectively a combined entity with two joint ventures, one in Canada and one in the U.S.; however, long-term value could be created if the potential combination of Coors and Molson attracts a larger suitor, like Heineken or SABMiller, since as the number five global brewer the company would derive most of its earnings from businesses with a number two market position.
- Arik
Posted by Arik Johnson at July 24, 2004 10:46 AM | TrackBack
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