More on the Molson Sale
British brewer SABMiller is reportedly mulling an offer for Canada's Molson. The reports were first published in the Toronto Globe and Mail.
SABMiller is believed to be reviewing the potential for an offer but is awaiting more details on a Coors and Molson contract, which could discourage any deal. SABMiller has been in touch with a dissident member of the family that controls Molson, the Financial Times reported.
The dissident holder, Ian Molson, is in an alliance with Toronto-based Onex, the report said.
A formal bid from SABMiller could further threaten Molson's proposed merger with U.S. brewer Adolph Coors.
SABMiller officials in London declined to comment on the reports.
The Coors merger proposal announced in July by Molson management, including chairman Eric Molson, has drawn criticism from Molson shareholders and rumors the deal may collapse, according to media reports. The proposal would create a $6 billion company that would be the world's fifth-largest brewer.
Ian Molson is Eric Molson's cousin and a former company deputy chairman who in July wrote to the board and expressed an interest in making a bid that could reach $4 billion, the Wall Street Journal reported. Ian Molson resigned from the board in protest of Eric Molson's management, the Journal said.
The contract with Coors sets that Molson brews and distributes Coors Light beer in Canada. Coors could force Molson to continue brewing Coors Light for another 10 years without sharing any of the profits with Molson or its new owner, the Journal said, citing unnamed industry executives.
Buying into Molson would allow London-based SABMiller to continue its North American expansion and escalate its market battle with St. Louis-based Anheuser-Busch, the world's second-largest brewer, the Journal said. SABMiller entered the market in 1992 with its purchase of Miller Brewing.
The chief executives of Canada's Molson Inc. and Colorado's Adolph Coors Co. insist they are sticking with their plan to merge the two brewers and dismissed any rumors of a competing bid for Molson.
"They're simply rumors. The synergies that we have identified with the Coors company far outnumber any other synergies, and we recognized that for the last five years," said Dan O'Neill, Molson's chief executive.
"It's unmatched -- there's nothing out there that matches it. Once people see the proxy, they will understand it."
O'Neill said no other offer had been received.
He dismissed the news report that said London-based global brewing giant SABMiller PLC is in talks with Ian Molson, Molson's former deputy chairman, to mount a rival bid for the Montreal-based brewer.
The Molson and Coors merger must have the approval of two-thirds of both Molson's class A non-voting and class B voting shareholders and the approval from each class of Coors shareholders.
The brewers have said the merger will cut debt and lower costs, with annual combined savings of $175 million by 2007.