Just pulled this off the AP wire.
NEW YORK (AP) - The makers of Coors and Miller Lite plan to
combine their U.S. brewing operations in an effort to compete
better against industry leader Anheuser-Busch.
The joint venture announced Tuesday will be known as MillerCoors
and will have responsibility for selling brands including Miller
Lite, Miller Genuine Draft, Coors, Coors Light and Molson Canadian
in the U.S.
Anheuser-Busch Cos. accounts for about half of the U.S. market
with brands such as Budweiser, Michelob and Bud Light.
SABMiller PLC will have a 58 percent economic interest in the
venture and MolsonCoors Brewing Co. will own 42 percent of the new
company. They will have equal voting interests, however.
Precise financial terms of the deal were not disclosed.
Shares of MolsonCoors climbed $6.17, or 12.1 percent, to $57 in
morning trading Tuesday. SABMiller shares rose 2.3 percent to 1,499
pence ($30.57) in midday trading in London.
The joint venture will also result in cost savings of $500
million, the companies said. That savings will mainly come from
reducing shipping distances, finding economies of scale in brewing
operations, optimizing production and eliminating duplicate
corporate and marketing services.
London-based SABMiller, which brews Miller Lite as well as a
slew of European beers, and Denver-based Molson Coors, the brewer
of Coors Light and the craft beer Blue Moon, will each have five
representatives on its board of directors.
Pete Coors, vice chairman of Molson Coors, will serve as
chairman of the new company and Molson Coors Chief Executive Leo
Kiely will be the new CEO of the joint venture. Tom Long, CEO of
Miller, will be appointed president and chief commercial officer.
Under the terms of the agreement, the companies said they will
conduct all of their U.S. business exclusively through the venture.
The companies project MillerCoors will have combined annual beer
sales of 69 million U.S. barrels with revenue of about $6.6
Coors said the joint venture will allow both companies to
compete for U.S. consumers who are "looking for greater choice and
differentiation," as wine and spirits continue to entice beer
drinkers and imports and craft beers garner a larger share of the
The companies said by combining their U.S. operations, the
venture will be able to invest more in marketing its brands to
consumers and compete more effectively with larger brewers like
Anheuser-Busch and InBev NV S.A., which imports a large number of
global beers into the U.S. and is the world's largest brewer by
"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," said SABMiller Chief Executive
The companies said the deal will add to both of their earnings
in the second full year of combined operations.
The companies said $50 million of the total cost savings will be
recorded in the first full financial year after the two companies
combine. Another $350 million will be saved in the second year and
the last $100 million will come in year three.
The companies added they will have to make a one-time cash
outlay of $450 million to achieve those savings.
A final agreement is expected to be signed by the end of 2007
with the deal closing in mid-2008, the companies said.