The Successful Investor Hotline – Friday, September 18, 2015

Article Excerpt

MOLSON COORS CANADA INC., Toronto symbols TPX.A $107.34 and TPX.B $111.00, jumped 20% this week in response to Anheuser-Busch InBev’s offer to buy rival brewer SABMiller plc. In 2008, Molson Coors merged its U.S. brewing operations with those of SABMiller to form MillerCoors. Each company has a 50% voting interest in this joint venture, but SABMiller gets 58% of the profits, while Molson Coors gets 42%. To satisfy competition regulators, a combined Anheuser-Busch InBev and SABMiller would probably have to sell its stake in the MillerCoors joint venture. Molson Coors has a right of first refusal over any sale and would probably buy SABMiller’s stake. This would cost around $10 billion U.S., which is a high 64% of Molson Coors’s $15.6-billion U.S. market cap (the value of all outstanding shares). Still, gaining control of MillerCoors would let the company realize more cost savings: since 2008, MillerCoors has saved roughly $1 billion U.S. by combining plants and distribution networks. Molson Coors could also offset all…

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