Posted on 10/09/2007 6:29:16 AM PDT by presidio9
The makers of Coors and Miller plan to combine their U.S. brewing operations in an effort to compete better against industry-leader Anheuser-Busch.
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The joint venture announced Tuesday will be known as MillerCoors and will have responsibility for selling brands like Miller Lite and Coors Light in the U.S.
Anheuser-Busch Cos. accounts for about half of the U.S. market with brands such as Budweiser 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.
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 billion.
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 market.
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 volume.
"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 Graham Mackay.
SABMiller shares rose 2.3 percent to 1,499 pence ($30.57) in midday trading in London.
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.
Final approval of the deal is expected by the end of 2007, the companies said.
This reminds me of the HP/Compaq merger....two companies who make crappy products coming together to make more crappy products.
It reminds me of this joke:
The CEO’s of Budweiser, Coors, Miller and Guinness were all having lunch together.
A waiter approached the table and asked what they would like to drink. The CEO of Budweiser responded: “Make mine a Bud.”. The CEO of Coors stated that he would like a Coors. The CEO of Miller asked for a Miller. The CEO of Guinness answered with “Iced tea, please.”
The CEO of Budweiser turned to the CEO of Guinness and said: “Iced tea?” The CEO of Guinness replied: “Well, if none of you are drinking beer, then neither will I.”
Why not? Both are watery, tasteless brews. I suspect both are actually seltzer water with a tinge of food coloring.
Of those four beers, Guiness has by far the lowest alchohol by volume.
I wonder if the Coors people know about the Miller people’s sponsorship of the sado-masochistic “last supper” at the San Francisco gay-fest.
Those Moops made some good beer, too!
Well, if none of you are drinking beer, then neither will I.” LOL.
Not only is that a joke, it is also true. Make mine a black and tan.
Coors and Miller adding more water to a water down product. If you want to drink a real miller (can’t stand it) or coors, go to Canada. More alcohol content in their beer there. They pawn flavor water to us in the states.
They will know shortly if Mr. Donahue has breath in his lungs.
I’ll stick with Tree Frog Beer. Cool, light, refreshing, organic, natural, tasty.
In other crappy merger news, Gateway Computer has purchased Packard Bell. http://www.pcmag.com/article2/0,1895,2193298,00.asp
I don’t drink either. I drink Bud Light.
Well, I remember it, and if this merger goes, then it’s back to Bud for me.
Before I discovered the microbreweries in the US, I had always assumed that Americans are incapable of brewing beer. Now I know better- the major US brewers produce low-alcohol swill while the big brewers here in Canada produce high-alcohol swill.
Doesn’t affect me. I drink Rolling Rock (Owned by AB), and Deschutes Black Butte, which is a Mircro-Brew from Oregon.
Only beer of theirs I drink is Miller Genuine Draft, and that only if a resteraunt doesn’t have any beers I like or a Hefeweizen.
Maybe this is beside the point, but can't they go with Miller-Coors or Miller Coors.
As a former employee of PricewaterhouseCoopers, I hate when they just ram the words together for no reason. MillerCoors is just soooo 90s, soooo late 20th century.
TS
(PwC was formerly Price Waterhouse and Coopers & Lybrand. I don't remember if P.W. has "& associates" in their title as well)
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