The Successful Investor Hotline – Thursday, April 5, 2012

Article Excerpt

PLEASE NOTE: Our next Hotline will go out on Friday, April 13, 2012. MOLSON COORS CANADA INC., Toronto symbols TPX.A $45.24 and TPX.B $41.10, is buying StarBev L.P., which owns nine breweries in central and eastern Europe. StarBev brews over 20 local beers, as well as major international brands, such as Stella Artois, Beck’s and Lowenbrau, under license. Molson Coors aims to close the deal by June 30, 2012. The $3.5-billion cost is equal to 47% of Molson Coors’ $7.5-billion market cap (all amounts except share price in U.S. dollars). The company held cash of $1.1 billion at the end of 2011, so it will to borrow most of the money it will need to complete this purchase. Even so, it can comfortably afford to buy StarBev: Molson Coors’ long-term debt of $1.9 billion is a moderate 25% of its market cap. Big acquisitions like this are risky. That’s why the stock fell 10% on the news. However, Molson Coors feels its brewing expertise and…