Beer giants SABMiller (OTC: SBMRY) and Molson Coors (NYSE: TAP) took a huge step toward grabbing market share in North America by announcing today their intention to combine U.S. operations into a new company, MillerCoors. The new entity will start with combined U.S. sales of of 69 million barrels of suds, net revenues around $6.6 billion and combined EBITDA of $842 million. The companies expect combined production and distribution to lop off around $500 million from the annual expense side within three years. SAB and TAP also expect the move to boost both companies' EPS within the second year after integration is complete.Voting interest in MillerCoors will be split 50/50, and the new company will be chaired by Peter Coors of Molson Coors. SABMiller, the larger of the two, will have a 58% financial interest.
One rationale for the move is that both companies will be better able to differentiate their brands, meaning, I suppose, that products such as Miller Lite vs. Coors Light will not longer be positioned as competing brews. The two will also provide a wide selection of imports, and the combined capacity should allow for the brewing of more boutique beers and other trendy beverages.
In a market long rumored ripe for consolidation, this partnership presents a stronger competitor to Anheuser-Busch's (NYSE: BUD) domination of the U.S. beer market. The combined market cap of SABMiller ($44.83 billion) and Molson Coors ($8.27 billion), well above that of BUD ($39 billion), demonstrates the strength the two bring to the fight.
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Reader Comments (Page 1 of 1)
10-09-2007 @ 3:00PM
Tom said...
I don't know why a conservative family like Coors would want to hook up with a supporter of Homosexual S&M and anti-Christian parades.
10-14-2007 @ 9:03PM
Brewbddy said...
Now, it's just a matter of time before A-B and Inbev combine...it's inevitable.