US: SABMiller, Molson Coors confirm creation of MillerCoors in US

By | 9 October 2007

SABMiller and Molson Coors have confirmed plans to combine their US and Puerto Rico operations.

The two brewers announced today (9 October) that they will create a joint venture targeted at creating "a stronger, brand-led US brewer with the scale, resources and distribution platform to compete more effectively in the increasingly competitive US marketplace".

The new company, which will be called MillerCoors, will have annual pro forma combined beer sales of 81m hectolitres and net revenues in the region of US$6.6bn.

The transaction is expected to generate around $500m in annual cost synergies to be delivered in full by the third full financial year of combined operations, and is expected to be earnings accretive to both companies in the second full financial year of combined operations.

Each side will each have a 50% voting interest in the joint venture and have five representatives each on its board. Based on the economic value of the contributed assets, SABMiller will have a 58% economic interest in the joint venture and Molson Coors will have a 42% economic interest.

Pete Coors, vice chairman of Molson Coors, will serve as chairman of MillerCoors, while Graham Mackay, SABMiller's CEO, will serve as vice chairman of MillerCoors. Leo Kiely, current CEO of Molson Coors, will be the CEO of the joint venture, and Tom Long, current CEO of Miller, will be appointed president and chief commercial officer.

"Given the highly complementary nature of our US assets, operations and geographic footprint, this is a logical and compelling combination that we expect will create significant value for shareholders while benefiting distributors, consumers, retailers and the market overall," said Mackay. "We look forward to working with Molson Coors to jointly develop the combined business."

Pete Coors added: "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. Creating a stronger US brewer will help us meet these challenges, compete more effectively and provide U.S. consumers with more choice, greater product availability and increased innovation. The Molson and Coors families are firmly in support of this strategic transaction."

The parties will enter into a mutual standstill agreement, which will prevent SABMiller and Molson Coors from making an unsolicited offer for the shares of the other brewer for a period of ten years following completion of the transaction. The two have also agreed to appropriate rights of first offer and last refusal in the event of either party wanting to sell its interest in the joint venture after an initial no-sale period of five years.

Final agreement on the transaction is expected by the end of this year.

Sectors: Beer & cider

Companies: Molson Coors, SABMiller

View next/previous articles

Currently reading -

US: SABMiller, Molson Coors confirm creation of MillerCoors in US

There are currently 2 comments on this article

The FTC and politics. I am sure the wholesalers and craft brewers will not be happy with this proposed merger. A JV seems less threatening.


Greg Moore said at 7:07 pm, October 9, 2007

Reply to this comment

Related articles

US: Blue Moon leads top 30 beer brands in US - research

The fastest growing beer brand in the US last year was a Belgian-style wheat ale brewed by Molson Coors, according to recent research.

10 things you should know about... Vin & Sprit

10 things you should know about... Vin & Sprit

Focus - Brewers and regulators both eyeing growth in strong beer

Strong beers may offer brewers significant growth potential but their perception as a cheap way of consuming alcohol puts them directly in the regulatory sights of governments looking to tackle excessive alcohol consumption and encourage responsible drinking. Catherine Mars, industry analyst for alcoholic drinks at Euromonitor International, reviews recent developments in this growth sector.

Read more on this hot issue

Miller and Coors to reshape the US brewing landscape

News this week that SABMiller and Molson Coors are to team up in the US beer market may have caught the industry by surprise, but the logic is compelling. As Olly Wehring reports, not only can the deal provide a boost to the country's number two and three brewers but it offers a significant challenge to Anheuser-Busch too.

just-drinks tagline

Not a member? Join here

Decrease font sizeDecrease font sizeDecrease font size Increase font sizeIncrease font sizeIncrease font size Comment on this article Email this to a friend Print this page