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October 05, 2004

Molson/Coors Merger in Doubt?

The Federal Trade Commission approved the merger today of Canada’s largest brewer and the U.S.’s third largest brewer. However, the deal between Adolph Coors Co. and Molson Inc. may still have a ways to go before it becomes a reality.

According to Forbes, the new entity, to be called Molson Coors Brewing Co., would become North America’s largest brewer surpassing Anheuser-Busch and SAB Miller with a total of $6 billion in revenues.

Although the FTC decision today paves the way for the merger, there is still another hurdle that needs to be overcome. The deal proposal now has to goes to the companies' shareholders for approval, which may not be an easy task.

According to Bloomberg, the merger requires approval of 2/3 of the stockholders of Molson’s class A shares. In an effort to aid its chances of being approved, Molson's management has proposed a plan to allow holders of options for their class A shares to vote on the deal. This plan is being staunchly opposed by almost 10% of class A stockholders.

On another bad note, if stock performance is any guide to the future success of a merger, which it often is, this merger is in trouble. Since the merger announcement in July, Coors’ shares have fallen 10% while Molson’s have fallen by 9%.

Posted by Quentin Johnson at 01:27 PM in Alliances | Permalink


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