Molson Coors shares at all-time high on hope of an SABMiller takeover

A six pack of Molson Coors Brewing Co. Canadian beer is displayed for sale at a supermarket in New York, U.S. Scott Eells/Bloomberg via Getty Images

MONTREAL – Molson Coors’ shares closed at an all-time high Friday on increased investor hope that the brewer will gain control of MillerCoors, its joint venture with SABMiller in the United States.

The Montreal and Denver-based brewer’s (NYSE:TAP) shares closed at US$84.38, up 2.15 per cent in trading on the New York Stock Exchange after hitting US$84.52 earlier in the session.

Investors were responding to reports that SABMiller’s largest shareholder – cigarette maker Altria which owns a 27 per cent stake in the world’s second-largest brewer – is open to considering a takeover proposal from Anheuser-Busch InBev, the maker of Budweiser, Corona and Labatt’s, that could be worth around US$90 billion.

A successful takeover would immediately allow Molson Coors to increase its stake in MillerCoors to 50 per cent from 42 per cent, according to terms of its 2008 joint venture deal.

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Industry analysts expect U.S. anti-trust regulators would also require the world’s top two brewers to sell SABMiller’s stake in MillerCoors. Molson Coors has the right to a first and last offer to purchase the remaining 50 per cent interest.

Getting control of MillerCoors would allow Molson Coors to gain more cost savings in the U.S. while continuing to sell Miller’s portfolio of brands along with their own, said Brittany Weissman of Edward Jones.

“They’ve saved some money but not as much as they could if it were one entity,” she said in an interview.

Weissman said there’s still lot’s of uncertainty about whether SABMiller will accept a takeover deal. It tried unsuccessfully to team up with Heineken to fend off previous acquisition efforts. Its two largest shareholders together control 41 per cent of the company, making a deal unlikely if they oppose. And then anti-trust concerns are expected from the U.S. and China.

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She said Molson Coors share would drop back to the high $60s or low $70s if a deal is scuttled.

Molson Coors chairman Geoff Molson said the brewer isn’t ready to comment on a merger of its larger rivals or whether the company would try to buy SABMiller’s 58 per cent stake in Miller Coors.

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“We haven’t done the analysis on the situation because it is fresh news so we are going to wait to make a comment until after we’ve had a chance to talk about it,” he said in an interview Thursday.

Weissman doesn’t expect Molson Coors will wait until SABMiller accepts InBev’s proposal.

“There is a lot that has to go right for SABMiller to accept the deal and for that deal to go through.”

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