Miller & Coors & Molson now under one roof
Steve’s breakdown: That’s right and they say they’ve never seen Peter Coors smile so hard in their lives. My point being is we expect a lot – we mean a lot – of changes with the brands involved. This will take some research but that’s what interns are for.
DENVER, CO: Golden Brewery, launched in 1873 by German immigrants Adolph Coors and Jacob Schueler, has defied the odds once again, closing on a $12 billion purchase that makes it the third-largest beer company in the world.
Denver-based Molson Coors Brewing Co. on Tuesday took over the 58 percent of the MillerCoors joint venture that it didn’t already own, doubling the company’s size and giving it the full control needed to survive in a rapidly consolidating and globalizing industry.
“It is a heck of a story, when you stand back and look at what has been engineered here,” said Mark Hunter, CEO of Molson Coors. “I have never seen Pete Coors with such a big smile on his face.”
Pete Coors is the great-grandson of Adolph and a former chairman of Coors Brewing, which survived prohibition and numerous challenges over the years to remain one of the state’s signature companies.
After a 17 percent gain in its stock price this year, Molson Coors has a market value of $23.4 billion, putting it just behind Dish Network as the state’s largest public company, a title it regularly held in decades past. Molson Coors shares closed at $109.94, up a penny, on Tuesday, a day in which the S&P 500 lost 1.24 percent.
“We have the world’s third-largest brewer headquartered here. That is significant,” Hunter said. “A big business has become a bigger and stronger business.”
The $12 billion acquisition will boost Molson Coors’ headcount to 18,000 employees, up from 9,000. Sales will double, the company said, and the deal is expected to generate $200 million in cost savings over the next four years.
But the company will need to sell more heavily into global markets if it wants to continue growing, something Hunter said he plans to do.
As part of the deal, Molson Coors gains the rights to distribute Miller brands abroad. Without the shackles of the joint venture, it can sell its legacy brands such as Coors Light and Blue Moon in countries such as Argentina and South Africa.
That international diversification is a must, given that more than 75 percent of the combined company’s sales will come from North America, up from 68 percent before the deal, Bloomberg Intelligence analyst Duncan Fox said in a recent research note.
Beer remains the alcoholic beverage of choice in the U.S., but individuals are drinking less of it each year and local craft brewers have won over beer aficionados. Big brewers across the globe have combined forces to lower their costs and gain access to faster growing markets, while at the same time buying up some of the more successful craft brewers.
Coors Brewing merged with Canadian brewer Molson in 2005 to create Molson Coors. In 2008, SABMiller and Molson Coors, then the country’s second- and third-largest brewers, formed a joint venture based in Chicago to run their U.S. operations.
Although Molson Coors only had a 42 percent ownership interest in the venture, each company had an equal vote and operational say. Cultural integration has been underway for eight years now, removing a hurdle that trips up many corporate combinations.
“When Miller and Coors came together, they were fundamentally different businesses,” Hunter said. “The businesses are now more similar.”
Consolidation, however, has grown in scale and scope. Anheuser-Busch InBev and SABMiller in November announced a $100 billion mega-merger, the largest ever in the industry. But anti-trust regulators weren’t keen on seeing the combined company gain even more dominance in the U.S.
To win approval, the two companies agreed to sell the interest in MillerCoors, and Molson Coors exercised its right of first refusal, borrowing $9 billion and raising $3 billion from stock sales to finance the purchase. (The so-called mega-brew merger of A-B InBev and SABMiller closed Monday.)
Molson Coors expects much of its $200 million in savings over the next four years to come from shared services and economies of scale. Instead of overseeing a $2 billion-a-year supply chain, for example, Molson Coors now controls $7 billion a year in purchases.
The MillerCoors joint venture joins Molson Coors Canada, Molson Coors Europe and Molson Coors International as wholly owned subsidiaries under the Molson Coors Brewing umbrella.
Pete Coors, in a note to employees, recalled when his great-grandfather bought out his business partner Jacob Schueler in 1880. Adolph Coors contributed $2,000 to the original venture, while Schueler put in $18,000.
“We don’t know how much was paid other than Adolph ‘settled all accounts’ and Mr. Schueler ‘retired.’ ” Coors said in his note. “Today’s settlement of the purchase of the 58 percent of MillerCoors to return to complete ownership is the modern version of extraordinary and monumental. I believe Adolph would be as proud as I am.”
Feb. 4, 1847: Adolph Herrman Kohrs Sr., who later changed his surname to Coors, is born in Prussia. At age 21, he emigrates to America.
Nov. 14, 1873: Coors, with investment help from Jacob Schueler, purchases what would become the Golden Brewery along Clear Creek.
1880: Coors buys out Schueler. Production is 3,500 barrels per year.
1916: Prohibition hits Colorado. Coors survives by selling malted milk, near-beer and ceramics.
1955: Coors tops 1 million barrels annually.
1978: Coors introduces Coors Light.
1991: Coors becomes available in all 50 states, allowing it to eventually move into third place among U.S. brewers.
Dec. 25, 2002: Coors agrees to buy Carling operations from Bass Brewers in England, making it one of the 10 largest breweries in the world.
Feb. 9, 2005: Coors completes merger with Molson to become world’s fifth-largest brewery.
July 1, 2008: SAB Miller and Molson Coors launch MillerCoors to manage U.S. operations.
2011: Coors Light surpasses Budweiser as the nation’s second-largest beer by volume.
Oct. 11, 2016: Molson Coors purchases the 58 percent interest of SABMiller in MillerCoors for $12 billion, giving it full control of the Coors, Molson and Miller brands globally.