Adolph Coors Co. and Canada's Molson Inc. announced a plan Thursday to combine their family-run breweries into the world's fifth-largest beermaker and better position themselves to pursue growing overseas markets.
With combined annual revenue of $6 billion, the newly formed Molson Coors Brewing Co. would be able to compete as rivals gain more global muscle and industry looks to new markets in China and South America amid a flat market in the United States.
The company would have a 43 percent market share in Canada, 21 percent in the United Kingdom and 11 percent in each of the United States and Brazil, where Molson has struggled.
Coors is third in the U.S. behind Anheuser-Busch and SABMiller while Molson is in a tight race with Interbrew SA's Labatt Brewing in Canada. In terms of both revenue and number of barrels sold, the combined company would be fifth globally.
"This transaction gives us the critical mass to be a real player in a rapidly consolidating industry," said Coors chief executive Leo Kiely.
The deal would merge two family-led breweries both founded more than a century ago and would unite brands like Coors Light, Molson Canadian and Carling.
"Since Molson's first issuance of stock in 1945, the Molson family has not wavered in its commitment to build a company that will withstand the test of time," Molson chairman Eric Molson said.
"Rather than shake our resolve, the reshaping of this industry has increased our determination to participate in that consolidation but on our own terms and on terms we believe would be favorable to all our stockholders."
The history between the two companies began in 1998 when they began selling each other's products in their respective countries. Several years ago, they began talking about a potential merger, negotiations that began taking shape three or four months ago, Kiely said.
Coors and Molson said their combination should generate $175 million a year by 2007 in cost savings by optimizing the brewery network in Canada, making material procurement more efficient, streamlining the organization and improving tax efficiencies.
Kiely said no decisions had been made yet on whether there would be layoffs.
http://www.forbes.com/business/manuf...ap1466820.html
Is this merger good for beer? Please discuss.
Threaded Mode