USA: Molson Coors Brewing Co. faces class-action complaints
A class action lawsuit was filed in the United States District Court for the District of Delaware on behalf of: (i) former shareholders of Molson Inc. ("Molson") who received shares of Molson Coors Brewing Company ("Molson Coors" or the Company) as a result of the February 9, 2005 merger of Molson by and into the Adolph Coors Company ("Coors"); (ii) open market purchasers of the common stock of Coors from July 22, 2004 to February 9, 2005, inclusive; and (iii) open market purchasers of the common stock of the Company, following completion of the merger between Molson and Coors on or about February 9, 2005 to April 27, 2005, inclusive, (the "Class Period") seeking to pursue remedies under the Securities Exchange Act of 1934 (the "Exchange Act"). This statement was issued by the law firm of Schiffrin & Barroway, LLP on May 23.
The complaint charges Molson Coors, Molson Coors Brewing Company, Peter H. Coors, W. Leo Kiely III, Charles M. Herington, Franklin W. Hobbs, Randall Oliphant, Pamela Patsley, Wayne Sanders, Albert C. Yates, Timothy V. Wolf, Peter Swinburn, David G. Barnes and Peter M.R. Kendall, with violations of the Securities Exchange Act of 1934. More specifically, the Complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that at the time of the merger (on or about February 9, 2005), Molson Coors was experiencing material adverse changes to its business; (2) that at the time of the merger, Coors’s business was, and would continue to be, adversely impacted by the conditions which materially impacted the Company’s performance so that Coors was operating well below plan and well below consensus estimates; (3) that demand for the Company’s products had dramatically slowed; and (4) that Coors, and as a result of the merger, Molson Coors suffered from fundamental erosion of its business in all four of its core markets.
On April 28, 2005, only weeks after the merger closed, before the open of trading, Molson Coors announced disappointing results for the Company’s first quarter of 2005. On news of this, shares of the Company fell $14.89 per share, or 18.5 percent, to close at $63.00 per share on unusually heavy trading volume. That same day, defendant O’Neill resigned from his post as Chair of Office of Synergies and Integration, taking with him $4.8 million as a severance payment.
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