UK: Molson Coors scoops Cobra Beer out of administration

By Chris Mercer | 1 June 2009

Molson Coors has rescued Cobra Beer from administration via a joint venture deal with the group's founder, Lord Bilimoria.

Cobra was forced into a so-called pre-packaged administration deal late last week after losing support from one of its key creditors, a source close to the situation confirmed to just-drinks today (1 June).

Molson Coors UK and Cobra founder Lord Bilimoria then bought the group back, using a newly formed joint venture, Cobra announced over the weekend. Molson has paid GBP14m (US$22.9m) for a 50.1% stake in the venture, just-drinks understands.

Pre-packaged administration is commonly a last resort for companies in financial difficulty. Cobra's move means that some unsecured investors in the business are likely to lose their money.

The Molson Bilimoria joint venture has acquired the Cobra brand and certain assets of the business from Cobra's administrator, PricewaterhouseCoopers.

Bilimoria, who put Cobra up for sale last year, has separated the group's Indian brewing operations from the UK beer business, which mainly serves Indian restaurants but also has a growing retail and on-trade presence.

Despite its financial difficulties, Cobra has repeatedly said that its sales have grown ahead of the UK market. Sales by volume rose 20% in the nine months to 30 April, against a national beer sector down by 8% for the same period, Cobra said at the weekend.

Mark Hunter, chief executive of Molson Coors UK, said: "The joint venture will enable Cobra Beer to move on to the next stage of its brand evolution and open up significant opportunities for Molson Coors, including ethnic restaurants, where Cobra Beer has built an impressive distribution base."

Several drinks companies have eyed a move for Cobra over the last 12 months, including Diageo and SABMiller.

Sectors: Beer & cider

Companies: Molson Coors, Cobra Beer, Diageo, SABMiller

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