Canada, Montreal: Molson, Inc. announced on February 2 it has received a final order from the Superior Court, District of Montreal, Province of Quebec approving a plan of arrangement under the Canada Business Corporations Act to effect Molson's merger of equals with Adolph Coors Company.
As previously announced, Molson and Coors shareholders approved the combination at their special shareholder meetings held on January 28, 2005 and February 1, 2005, respectively. The closing of the merger is expected to occur on February 9, 2005 prior to the opening of the stock markets in Canada and the United States.
The merger will create the world's fifth largest brewer by volume, just behind Dutch Heineken. The new company, to be called Molson Coors Brewing Co., will have a 43 % market share in Canada and 11 % in the United States and Brazil and 21 % in Britain, with brands such as Molson Canadian, Coors Light, Carling, Keystone, Aspen Edge, Zima, Rickard's and Kaiser. The new Molson Coors Brewing will have 15 breweries and nearly 15,000 employees.
The merged company's new CEO, Leo Keily, says Molson Coors will streamline operations, raise spending on marketing and review its operations in Brazil, where Molson lost money and was forced to write down part of its investment.
Coors and Molson say their union will generate cost savings of $175 million a year by 2007 by optimizing the Canadian brewery network, making material procurement more efficient, streamlining the organization and improving tax efficiencies. The company will have dual headquarters in Montreal and Denver, with U.S. operations based at the Coors brewery complex west of Denver and the Canadian brewing operations managed from Toronto.
Analysts say the combined company will be in a much better position to challenge industry giants Anheuser-Busch Cos., SABMiller PLC and others in the battle for China and other overseas markets as beer sales remain flat in North America. Molson is facing diminishing market share in Canada and is still grappling with problems stemming from its Brazilian acquisition of Kaiser in 2002. Coors, meanwhile, has seen sales of leading brand Coors Light fall off in the United States, analysts say.
The history between Molson and Coors began in 1998, when they began selling each other's products in their respective countries.
Under the merger deal, each Molson class-B share will be exchanged for a 0.126 voting share and 0.234 of a non-voting share in the combined company. Each Molson class-A share will be exchanged for a 0.36 non-voting share of Molson Coors. The exchange for Coors shareholders is one-for-one. Last month, the companies dramatically increased a special dividend for Molson shareholders to $4.53 per share US from $2.71 US under an earlier offer - a 67 per cent boost, or about $532.6 million. A rival bid from Ian Molson, the brewery's former deputy chairman, never emerged.
Molson is Canada's largest brewer and one of the world's leading brewers of quality beer with operations in Canada, Brazil and the United States. A global brewer with CAN$3.5 billion in gross annual sales, Molson traces its roots back to 1786, making it North America's oldest beer company. Committed to brewing excellence, Molson produces an award-winning portfolio of beers including Molson Canadian, Molson Export, Molson Dry, Rickard's, A Marca Bavaria, Kaiser and Bavaria.
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