[IBU] Molson Coors, SABMiller Brew Up Joint Venture

[Becker, Steven]

FYI
http://www.manufacturing.net/article.aspx?id=151236
Molson Coors, SABMiller Brew Up Joint Venture

By Lauren Shepherd, AP Business Writer
Manufacturing.Net - October 09, 2007

NEW YORK (AP) - Brewers Molson Coors Brewing Co. and SABMiller PLC plan
to combine their U.S. operations in a joint venture, which the makers of
Miller Lite and Coors Light said should help them compete more
effectively.
 
The new MillerCoors, announced Tuesday, will compete with U.S. industry
leader Anheuser-Busch Cos., maker of Budweiser, Michelob and Bud Light.
 
The joint venture also will 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.
 
SABMiller will have a 58 percent economic interest in the venture, and
Molson Coors will own 42 percent of the new company. They will have
equal voting interests, however. Precise financial terms were not
disclosed.
 
London-based SABMiller - which brews Miller Lite as well as a slew of
European beers and Molson Coors - the brewer of Coors Light and the
craft beer Blue Moon, each will 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, Miller CEO, 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.
 

Thank you.  

Steven Becker 

Pioneer Hi-Bred International 

A DuPont Company 

7200 NW 62nd Ave.

P.O. Box 184

Johnston, IA 50131-0184

515-270-3425 

steven.becker at pioneer.com 

www.pioneer.com <http://www.pioneer.com/>  

 

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