Molson Coors, SABMiller To Combine U.S. Operations

Beer maker Molson Coors and its British counterpart SABMiller plc announced Tuesday they were combining their U.S. operations. In a challenge to Anheuser-Busch, the U.S.'s largest beer maker by sales, the new venture will go by the name MillerCoors, and is expected to record annual beer sales in its first year of combined operations of 69 million U.S. barrels, good for revenue of about $6.6 billion. Anheuser sold 52 million barrels in the U.S. in the first half of 2007. MillerCoors expects the combination to begin saving it $500 a year in synergies, beginning after the first year of combined operations. SABMiller will control 58% of the joint venture while Molson Coors will control the remaining 42%. All of the companies' U.S. operations will be conducted through MillerCoors going forward. According to Molson Coors V.P. Pete Coors, "This transaction is driven by the profound changes in the U.S. alcohol beverage industry that are confronting both of our companies with new challenges." Molson shares have gained 33% so far in 2007, versus just 5.75% for Anheuser. SAB's U.S. shares are up nearly 17% YTD. MolsonCoors issued a two-for-one split for its shares on October 4.

Sources: Wall Street Journal, AP, TheStreet.com
Commentary: Molson Coors Enjoys Strong Loonie On Tap • Molson Coors vs. PepsiCo: Goldman Prefers Beer • Molson Coors Shares Ride UBS Upgrade Buzz
Stocks/ETFs to watch: Molson Coors Brewing Company (TAP), SBMRY.PK. Competitors: Anheuser-Busch Companies (BUD).
Earnings call transcript: Molson Coors Brewing Q2 2007

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