Adolph Coors, Molson to merge

Adolph Coors Co. and Canada’s Molson Inc. agreed to a merger that would create the world’s fifth largest brewer by volume, the com...

Adolph Coors Co. and Canada’s Molson Inc. agreed to a merger that would create the world’s fifth largest brewer by volume, the companies said on Thursday. The agreement is structured as a share exchange were Molson shareholders can either convert their stock to shares in the new company or receive exchangeable shares on a tax deferred basis, the companies said.

But the deal may be threatened by an up to $4-billion bid for the Canadian brewer from former Molson deputy chairman Ian Molson, the Wall Street Journal reported. Ian Molson, who has been feuding with his cousin, company chairman Eric Molson, quit the company in June.

Coors and Molson, Canada’s oldest brewer, did not return calls seeking comment on a potential rival bid but the companies said they agreed not to solicit other offers. Ian Molson could not immediately be reached.

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The deal solves expansion issues for both companies, which have watched larger rivals such as Anheuser-Busch Cos. Inc. and SABMiller Plc snatch up competitors around the globe over the past few years.

The combined company, which Coors and Molson say will produce $175 million in annual savings by 2007, is expected to be accretive to shareholders of both companies within the first year.

Molson chairman Eric Molson will hold the same position in the combined company, which will be called Molson Coors Brewing Company, while Coors’ Chief Executive W. Leo Kiely III will be the Chief Executive Officer.

The new company would have reported $6 billion in annual sales and volume of 51 million barrels for the 12 months ended March 31.

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Coors, which has seen its lower-calorie products lose market share in recent years, is set to issue its quarterly earnings report on Thursday morning. Montreal-based Molson has been searching for ways to gain a leg up on rival Labatt, owned by Interbrew.

The company bought Brazil’s Kaiser brewery in 2002 to expand its reach into South America, but the venture has proved to be a drain on its profits.

Molson said on Thursday it earned C$68.3 million, or 54 Canadian cents a share for the period ended June 30, up from earnings of C$54.7 million, or 43 Canadian cents a share for the same period last year.

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