Molson Coors Set to Double Sales With $12 Billion Beer Dealby
Brewer to take full control of MillerCoors joint venture
Miller brand to add to Molson Coors international portfolio
Anheuser-Busch InBev NV isn’t the only brewer that may be getting a whole lot bigger because of its plan to buy SABMiller Plc.
In a $12 billion side deal devised to help the mega-merger clear antitrust hurdles, Molson Coors Brewing Co. plans to buy the Miller brand globally and purchase the other 58 percent of the MillerCoors U.S. joint venture. The takeover would more than double Molson Coors’ revenue, which was $4.15 billion last year, and add $1 billion in earnings before interest, taxes, depreciation and amortization.
“The acquisition of the Miller brands globally gives us significant incremental scale in that business, takes us into a number of new markets and also strengthens our positions in a number of existing markets,” Molson Coors Chief Executive Officer Mark Hunter said in a phone interview.
The deal is dependent on regulatory approvals and the successful completion of AB InBev’s $107 billion acquisition of SABMiller, which moved a step forward with a formal offer on Wednesday.
Shares of Molson Coors, which is run from Denver and Montreal, rose 4.4 percent to $92.19 at the close in New York. The stock has now advanced 24 percent this year, with much of the gain coming on speculation of a deal similar to the one announced Wednesday.
While analysts had speculated Molson Coors would buy out of the rest of the MillerCoors venture, the acquisition of the Miller brand globally wasn’t as widely expected. The move plays into Molson Coors’ strategy of international expansion by adding another recognizable American brand to take abroad, Hunter said.
Molson Coors boosted international sales volume 21 percent in the first nine months of 2015. The company is focusing on international expansion in Central and South America and will also look to expand volume in Europe, Australia, India and parts of Africa, Hunter said.
Molson Coors said it will fund the Miller transaction with cash on hand and by issuing new debt and equity. The company is being advised by Kirkland & Ellis, Cleary Gottlieb and UBS AG.
Even with the sale of SABMiller’s stake of MillerCoors to Molson, the U.S. Congress and the Justice Department should closely examine the impact of AB InBev’s buyout of SABMiller on the domestic beer industry, said Bob Pease, chief executive officer of the Brewers Association, a trade group for independent craft brewers.
Harmful consequences could include a lack of competition among beer distributors and undue influence over the commodities used in brewing all over the world, he said.
“Over time, AB InBev will have significant new global revenues to invest in the United States if it chooses to do so as a result of this acquisition,” Pease said. “All of these issues -- and their potential effect on small brewers, the broader industry and U.S. beer drinkers -- must be carefully weighed and scrutinized by antitrust authorities.”