MERGER BREWING

first_imgRegulators might even see the pairing as helping offset Anheuser-Busch’s dominance, Mark Swartzberg, a Stifel Nicolaus analyst, wrote in a research note. Milwaukee-based Miller and Denver- based Molson Coors executives said in a conference call that approval could take six months for the joint venture. A final agreement is expected by Dec. 31, with the deal closing in mid-2008. SABMiller, which brews Miller Lite and Miller Genuine Draft, will have a 58 percent economic interest in the venture, and Molson Coors, maker of Coors and Coors Light, will own 42 percent. But they will have equal voting interests. Precise financial terms of the deal were not disclosed. The move positions the brewers to better compete against Anheuser-Busch, brewer of brands like Budweiser, Michelob and Bud Light, executives said. “It is clear Miller and Coors will be a stronger, more competitive U.S brewer than either company can be on its own,” said Molson Coors CEO Leo Kiely, who will be the new CEO of MillerCoors. Anheuser-Busch declined to comment publicly about the deal. Shares of Molson Coors Brewing Co. hit a 52-week high of $57.68 on the news Tuesday. The stock rose $5.32, or 10.5 percent, to $56.15. SABMiller shares rose 1.43 percent to close at 1,487 pence ($30.33) in London. Anheuser-Busch shares fell 46 cents to $51.57. Pete Coors, vice chairman of Molson Coors, will be chairman of the new company, with Kiely as CEO. Tom Long, CEO of Miller, will be president and chief commercial officer. Under the agreement, the companies said they will conduct all of their U.S. business exclusively through the venture. They project MillerCoors will sell 69 million barrels in the U.S. and reach revenue of $6.6 billion. Anheuser-Busch sold 102.3 million barrels in the U.S. last year and had net revenue of $15.7 billion. Kiely said beer sales and profits industrywide are dwindling due to rising sales of wine, spirits and craft beers. Beer Marketer’s Insights reports overall beer sales were up just over 1 percent last year, while crafts were up 11 percent to 12 percent, imports 7 percent to 8 percent and lights in the low single digits. Dragging the industry down, executive editor Eric Shepard said, is mainstream, nonlight beers, such as Bud, Miller and Coors. The merger has long been expected, he said, but the question is how Miller Lite and Coors Light will keep their own identities. “You have two powerhouse light brands,” he said. “Can they figure out how to do that and not get in each other’s way?” Bud Light is the nation’s top selling light beer, by far, he said, while Miller Lite and Coors Light have long been the second and third, sometimes swapping positions. Consumers won’t notice much difference after the merger, he said, though they can probably expect to see more national marketing campaigns. The company will decide on a location for the new headquarters as integration moves forward executives said, though they promised to keep a presence in Miller’s hometown of Milwaukee and Coors’ headquarters in Golden, Colo. Miller has 6,000 employees and eight breweries and Coors has 4,000 employees and two breweries. Executives on the call estimated the new company would have 10,000 employees and said they do not expect brewery closings.160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! By Emily Fredrix THE ASSOCIATED PRESS MILWAUKEE – The nation’s second and third-largest brewers, Miller and Coors, are planning to blend their U.S. operations to help them compete in a struggling U.S. industry and against its leader, Anheuser-Busch. The deal, announced Tuesday, will place almost 80 percent of the U.S. beer market in the hands of just two companies, the new MillerCoors and Anheuser-Busch, making it a likely target for a tough antitrust review. AD Quality Auto 360p 720p 1080p Top articles1/5READ MOREChargers go winless in AFC West with season-ending loss in Kansas CityMiller Brewing Co., owned by SABMiller PLC, has about 18 percent of the market, as of last year, according to trade publication Beer Marketer’s Insights. Molson Coors Brewing Co. has almost 11 percent, and Anheuser-Busch Cos. has just less than half the market. The companies said the combination will have to pass an antitrust review by either the Federal Trade Commission or the Department of Justice. Few analysts expect the government to try to block the deal, though, despite close scrutiny by regulators. Supermarkets and restaurants – two large buyers of beer – will play a large role in the review, said Veronica Kayne, an attorney at Haynes & Boone and former FTC antitrust official. But the emergence of many smaller brewers has made the industry more competitive than it was a decade ago, said William MacLeod, an attorney at Kelley Drye Collier Shannon and former antitrust official at the Department of Justice. That makes the transaction “much more feasible” now, he said. last_img read more