Tuesday, October 9, 2007

Molson Coors, SABMiller to Combine U.S. Operations

The Wall Street Journal reports that the second- and third-largest brewers in the United States are planning to merge their U.S. operations by mid-2008.

SABMiller PLC and Molson Coors Brewing Co. said they plan to combine their U.S. operations, creating a juggernaut that could threaten the decades-long dominance of Anheuser-Busch Cos. in the American beer industry.

The joint venture, to be called MillerCoors, would have annual revenue of about $6.6 billion and yield about $500 million in annual cost savings. The combination would bring together Miller Brewing Co., the second-largest U.S. brewer by sales with about 20% market share and Coors Brewing co., the No. 3 player with about 11% market share. Anheuser-Busch controls nearly half the U.S. beer market.

Read the entire article at The Wall Street Journal.

The news is confirmed by a press release at the SABMiller site:

Pete Coors, Vice Chairman of Molson Coors, will serve as Chairman of MillerCoors. Graham Mackay, SABMiller 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.

Commenting on the transaction, Graham Mackay, Chief Executive of SABMiller, said, "We are excited by the enhanced prospects for growth and the considerable benefits to all stakeholders that this joint venture offers. Given the highly complementary nature of our U.S. 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. We look forward to working with Molson Coors to jointly develop the combined business.”

Pete Coors, Vice Chairman of Molson Coors, said, “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. Consumers are broadening their tastes and are increasingly looking for greater choice and differentiation; wine and spirits companies are encroaching on traditional beer occasions, and global beer importers and craft brewers are both taking a larger share of volume and profit growth. Creating a stronger U.S. 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.”

Leo Kiely, Chief Executive of Molson Coors, said, “As a result of this combination, Miller and Coors will be able to provide more focused support for our flagship brands, while taking full advantage of consumers’ demand for imported and craft brands and innovative products. Both companies have a lot of momentum in their businesses today, and I am confident that this will accelerate as we adopt the best practices of both organizations. I am delighted to have the opportunity to be part of such a dynamic team that will mesh truly great brewing traditions, management teams, employees and cultures, while retaining both companies’ commitment to social responsibility and the communities in which we operate.”

Tom Long, Chief Executive and President of Miller, said, “Many important stakeholders will see clear benefits from the new company. Distributors will benefit from a robust brand portfolio, strengthened marketing investments, reduced complexity and costs, and enhanced relationships and coverage with large chain retailers. Retail customers will have an even stronger partner to drive consumer demand through product and packaging innovation, space optimization and enhanced retail execution. Our employees will have the opportunity to work for a stronger and more competitive player in the U.S. beer industry. And the communities where we do business will see a faster growing enterprise providing important economic benefits.”

Read the entire press release, which includes brand, strategic, and financial information, at the SABMiller site.

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