Molson Coors share price has soared in 2014

Molson Coors' share price has soared in 2014

The analyst community may be split on the prospect of a move for SABMiller by Anheuser-Busch InBev, but investors in Molson Coors clearly believe a transaction is in the offing.

A few client notes following Molson Coors' annual investor day earlier this week highlight the schism between analysts on the so-called 'mega-merger' that many observers have become obsessed with. In the 'yes' camp, there's Stifel, which sees no other option: "As we study 'obstacles' to a deal, our increasing difficulty is seeing why A-B InBev would choose NOT to buy SABMiller," todays note reads. "More and more, we see these impediments as complexity, not deal breakers."

Over at Nomura, however, the merger appears less likely to proceed. "We continue to be sceptical about the A-B InBev/SABMiller deal," the analyst says.

The link between Molson Coors and 'mega-merger' is MillerCoors, the US JV in which the North American brewer has a 42% stake. As speculation continues to suggest that an A-B InBev move for SABMiller is as inevitable as night following day, Molson Coors' share price has leapt: Witness a 31.5% rise from the start of this year to US$73.86 per share yesterday.

Shareholders clearly believe that Molson Coors is well-placed to benefit from a 'mega-merger', probably in the form of a buy-out of SABMiller's 58% holding in MillerCoors.

"We take our target price to $87 from $76, assigning a ... 50% probability (was 30%) to a 100% ownership of MillerCoors scenario," says Stifel.

Nomura, however, "sees other potential solutions for the MillerCoors stake. We (also) see some risk that the shares could give back recent gains."

Which side are you on?