merger

Molson successfully merged with Coors in 2005. The merger let the company cut its costs and expand market share. It now aims to repeat this success with a new joint venture in the U.S. with SABMiller PLC, the parent of Miller Brewing. The additional cost savings will help Molson Coors offset rising prices for barley, hops, packaging and transportation. Lower costs will also help Molson Coors compete with larger brewers like Belgium’s InBev, which recently launched a hostile takeover offer for U.S. market leader Anheuser-Busch. MOLSON COORS CANADA INC. (Toronto symbols TPX.A $56 and TPX.B $54; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 181.5 million; Market cap: $10.0 billion; SI Rating: Average) is the world’s fifth-largest brewer by volume. It operates mainly in the United States (58% of 2007 sales volume), Canada (19%) and Europe (23%). Molson Coors also exports its products to Latin America and Asia. Leading brands include Coors Light, Molson Canadian and Carling....

KRAFT FOODS INC. $29.38, New York symbol KFT, has finalized its agreement to merge its Post cereals business with Ralcorp Holdings Inc (New York symbol RAH). Kraft is now giving its own investors an opportunity to exchange some or all of their shares for a holding in Ralcorp. The company designed the offer so that its investors get to acquire Ralcorp at a 10% discount. Kraft believes the swap will be tax-deferred, but the IRS has yet to make a final ruling. Kraft will limit the exchange ratio to 0.6613 of a Ralcorp share for each Kraft share tendered. Kraft will calculate the final exchange ratio before the offer expires on August 4, 2008. Following the exchange, Kraft investors will own roughly 54% of Ralcorp....

TRANSCANADA CORP. $38.00, Toronto symbol TRP, and U.S.-based oil producer ConocoPhillips each own half of the proposed Keystone pipeline project, which will transport crude oil from Alberta’s oil sands to the United States. Due to strong interest from oil shippers, the partners now plan to extend the pipeline from the U.S. Midwest to refineries in the Gulf Coast region. They will also expand Keystone’s total capacity. This $7 billion U.S. expansion will increase the total cost of the project to $12.2 billion U.S. TransCanada’s share of that total comes to $6.1 billion U.S., which is equal to 2.4 times its 2007 cash flow of $2.6 billion (Canadian) or $4.93 a share. Keystone will reduce TransCanada’s reliance on its traditional gas pipeline business. The partners aim to complete this extension by the end of 2011....

RUBY TUESDAY, $6.41, symbol RT on New York, rose over 18% this week after it reported fiscal fourth-quarter earnings that exceeded consensus expectations. In the three months ended June 3, 2008, earnings per share fell 41.3%, to $0.27 from $0.46 a year earlier. However, consensus forecasts were for earnings of just $0.20 a share. Sales fell 4.3%, to $341.4 million from $356.8 million. Ruby Tuesday plans to close 15 company-owned restaurants as their leases expire. The company owns and operates 721 Ruby Tuesday restaurants. Domestic franchisees operate an additional 170 restaurants, and international franchisees run a further 54 restaurants....

SUPERVALU INC. $33 (New York symbol SVU, Conservative Growth Portfolio, Consumer sector; Shares outstanding: 212.3 million; Market cap: $6.8 billion; WSSF Rating: Average) is the second-largest supermarket operator in the United States behind Kroger. Its 2,480 stores account for roughly 80% of its revenue. The remaining 20% comes from its food wholesale operations, which supply about 2,200 grocery stores. The company is still absorbing its June 2006 acquisition of 1,125 Albertsons supermarket stores for $11.4 billion in cash, new shares and assumed debt. Supervalu still feels the merger will eventually cut its annual pre-tax costs by $150 million to $175 million. Most of the savings will come from closing less profitable stores, and improving the efficiency of its warehouses with automated equipment. However, it will probably take the company another year or two to realize the bulk of these savings....

THOMSON REUTERS CORP. $35 now trades under the symbol “TRI”. It plans to resume regular share buybacks following the recent merger of The Thomson Corp. and Reuters Group plc. The company aims to repurchase 2% of its shares. Buy.

MOLSON COORS CANADA INC. $57 has won U.S. regulatory approval for its joint venture with rival brewer SABMiller plc. Called MillerCoors, this new company will own Molson Coors’ and Miller’s operations in the United States and Puerto Rico. Molson Coors will own 42% of the new company....

BCE INC. $35 has delayed declaring its second-quarter dividend of $0.365 a share. The company is currently appealing a ruling by the Quebec Court of Appeal in favour of BCE’s bondholders that could threaten the company’s $42.75-a-share privatization plan. The case will go to the Supreme Court of Canada on June 17, 2008....

ENCANA CORP. $93 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 750.0 million; Market cap: $69.8 billion; SI Rating: Average) is a leading North American producer of natural gas and oil. The company took its current form in April 2002 through the merger of PanCanadian Energy Corp. and Alberta Energy Corp. Soon after, it sold most of its conventional properties to focus on what it calls “key resource plays”, including early-stage natural gas fields and oil sands. We thought this was a great idea. These assets cost more to develop, at least initially, but can last decades longer than conventional properties. Thanks to this strategy, plus higher oil and gas prices, EnCana’s earnings jumped from $1.44 a share (total $1.4 billion) in 2003 to $5.36 a share ($4.1 billion) in 2007 (all amounts except share price and market cap in U.S. dollars). Cash flow per share rose from $3.90 in 2003 to $11.06 in 2007. Revenue grew from $10.2 billion in 2003 to $21.5 billion in 2007....

EnCana encountered some skepticism when it shifted its focus from conventional energy production into unconventional gas and oil sands properties. These properties are costlier to develop and slower to generate a profit, but they have much greater long-term potential. The company’s latest move to add value is its plan to split itself into separate oil and gas companies. It drew acclaim rather than skepticism, and it helped push the stock up to a new all-time high of $98. We feel further gains are likely. ENCANA CORP. $93 (Toronto symbol ECA; Conservative Growth Portfolio, Resources sector; Shares outstanding: 750.0 million; Market cap: $69.8 billion; SI Rating: Average) is a leading North American producer of natural gas and oil....