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Coors and Molson discussing merger

Adolph Coors Co, the No. 3 US brewer, is engaged in talks to merge with Canadian brewing company Molson Inc, hoping to create a more powerful rival to market leaders SABMiller and Anheuser-Busch, sources said on Monday. PHOTO: REUTERS

The Adolph Coors Co, the third-largest beer company in the US, and Molson, the biggest Canadian beer company, said on Monday that they were in advanced discussions on a possible merger.

A combination would create a company with more than US$6.5 billion in annual revenue and could increase competitiveness in the consolidating beer industry, anal-ysts said.

But some analysts said Coors, which is based in Golden, Colorado, and Molson, with headquarters in Montreal, had experienced difficulties that a merger would not necessarily remedy.

"Both have their issues," said Benj Steinman, the editor of Beer Marketers Insights, an industry newsletter in Nanuet, New York.

Molson has been losing market share in Canada to discount brands.

Sales of Coors' Coors Light have slipped as Miller, the second most popular beer in the US, attracts customers by offering beverages with lower carbohydrates to weight-conscious drinkers.

The companies already work together, Steinman said.

In Canada, Molson sells Coors Light and, in a joint venture, the two companies sell Molson in the US.

"It's unclear how a merger would dramatically change either of their positions in either of those two markets," Steinman said.

Even if they did merge, Coors and Molson would trail far behind the market leaders in market share in the US.

Anheuser Busch, the maker of Budweiser, is No.1, with nearly 50 percent of the American beer market and SABMiller, the maker of Miller beer, is second with 18.4 percent of the market.

Last year Coors had 10.8 percent of the US market while Molson had less than half of 1 percent.

The companies, which are both publicly traded but dominated by founding families, have experienced recent management turmoil.

Peter Coors, the fourth generation of the Coors family to head the company, said in April that he was taking a leave as chairman to seek the Republican nomination for the Senate in Colorado.

At Molson, Ian Molson, the deputy chairman, resigned last month in a dispute with his cousin Eric Molson, the company chairman.

In nearly identical press re-leases on Monday, the companies said that a merger would blend top management.

The companies said Eric Molson was being considered as chairman of a combined company, while Leo Kiely, chief executive of Coors, could become the new company's chief executive.

Daniel O'Neill, Molson's chief executive, would then potentially become vice chairman.

The companies said an announcement on a deal could be made "in the near future."

But spokeswomen at the two companies declined to say whether the companies were thinking in terms of hours, days or longer. They also would not discuss financial terms of the deal.
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