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Miller and Coors join forces

SABMiller and Molson Coors have formed a joint venture with a valuation of up to US$10 billion. The brewers have agreed to combine Miller and Coors’ US and Puerto Rican operations in order to better compete against the likes of Anheuser-Busch, which leads the US beer category with a 50% market share.

According to Pete Coors, vice chairman of Molson Coors and chairman of the new company, the decision to join forces was driven by “profound changes” in the US drinks industry. He explained: “Wine and spirits companies are encroaching on traditional beer occasions, and global beer importers and craft brewers are both taking a larger share of volume and profit growth.”

The second and third-largest US breweries, will have equal voting rights although SABMiller will retain a 58% equity stake in the JV due to the higher value of its assets. The deal, which is forecast to close halfway through next year, is expected to lead to US$500m in annual cost savings. Combined beer sales for MillerCoors will amount to 81 million hectolitres per year, generating net revenues of around US$6.6bn.

Both companies will continue to run separate global businesses.

© Fionnuala Synnott, db 10 October 2007

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