Blog: Chris Brook-CarterKaiser chief rumour at Molson

Chris Brook-Carter | 23 September 2005

Such has been the speculation surrounding the future of Kaiser – the Molson Coors-owned Brazilian brewer – that the Canadian parent felt the need to re-state its position regarding the failing subsidiary this week.

Molson said that it was continuing to explore its options for Kaiser, but admitted these included “discussions with third parties regarding the Kaiser business”. It added that though it wants to remain in the Brazilian market, “it [only] can do so on a winning basis.”

That “winning basis” would still appear some way off and the statement comes as pressure increases on the Molson Coors management to dump Kaiser and focus on its other operations, particularly its struggling – but improving – Canadian business.

"People have recognised it [Kaiser] as a cash drain for some time," said analyst William Chisholm of Dundee Securities, in an interview in the Canadian press this week. "I think it's seen as a great mistake."

His views were echoed many times over from other sources.

I am sure Molson’s statement was intended to dampen press speculation about a possible sale to a Heineken/Femsa joint venture for around US$150m. But the deal is such a logical fit that the company’s management will be hard pressed to achieve this goal.

Heineken already has a 20% stake in the Brazilian beermaker, while Femsa has marketing and production agreements with Molson Coors.

The price will disappoint Molson Coors shareholders as it is considerably below the C$1.2 billion the brewer paid for Kaiser in 2002, in an effort to branch out from the stagnant Canadian market.

But, some analysts just-drinks spoke to suggest Kaiser would not even fetch that on the market were it not for early signs of an improvement in the Brazilian market for the brewer.


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