UK: Broker sees SABMiller, Molson Coors trouble ahead

By | 11 October 2007

SABMiller has had its share coverage lowered, with potential future problems in its new JV cited as the reason.

ING yesterday (10 October) reduced its rating on the brewer to 'hold' from 'buy', and warned that it saw difficulties getting its proposed merger with Molson Coors in the US past competition authorities.

While there were positives to the deal, announced earlier this week, the future isn't all rosy for SABMiller, ING said.

SABMiller did well avoiding Molson Coors' "difficult" UK position, the broker said, and cost savings in the region of US$290m would lead to a doubling of EBIT margin to around 16%. But ING warned that the two companies may have different agendas, with the two needing to decide on capex and other issues.

This could take time and might give conflicting views, ING noted.

In spite of this, the broker still upped its price target for SABMiller's shares to GBP15.75 from GBP15.00.

Sectors: Beer & cider

Companies: SABMiller, Molson Coors

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