GOLDEN, Colo. – Adolph Coors Co. (RKY) shareholders overwhelmingly approved a merger with Canada's Molson Inc. (search) on Tuesday, one of the last steps in a $3.4 billion deal that will combine two family-run breweries hoping to keep up with the race for new international markets.
The deal won support from 92 percent of Coors stockholders, the company said. It was approved last week by Molson shareholders.
"This is a momentous time for our company," Coors board chairman Peter Coors said. "Coors and Molson were both founded by bold pioneers in their own time and our family looks at this merger as a pioneering step in its own right."
A hearing in Quebec Superior Court is scheduled for Wednesday for final approval. The deal is expected to close Feb. 9.
The new Molson Coors Brewing Co. (search) will have 15 breweries and nearly 15,000 employees making brands such as Molson Canadian, Coors Light, Carling, Keystone, Aspen Edge, Zima, Rickard's and Kaiser.
The new brewer will rank fifth globally in both revenue and barrels sold. It would have a 43 percent market share in Canada, 21 percent in Britain and 11 percent in each of the United States and Brazil, where Molson has struggled.
Coors and Leo Kiely, the company's chief executive, toasted the merger at a news conference, with the chairman drinking a Molson and Kiely drinking a Coors Light. Both said they expect the merger to help the companies survive in an environment of consolidation.
"The goal is to have a generationally sustainable brewing company, and that's good for our employees," said Kiely, who added there will be layoffs and other changes.
"There are some overlaps and redundancies of course and those are the tough decisions to endure in the beer business," Kiely said.
Coors called the merger bittersweet.
"When you look at our long history here as a single company, it's a miracle we were able to achieve by surviving and prospering," said the silver-haired Coors, the TV face of the brewery and a Republican who lost last year's race for Colorado's open U.S. Senate seat.
Coors and Molson say their union will generate cost savings of $175 million a year by 2007 by optimizing the Canadian brewery network, making material procurement more efficient, streamlining the organization and improving tax efficiencies.
The company will have dual headquarters in Montreal and Denver, with U.S. operations based at the Coors' brewery complex west of Denver and the Canadian operations managed from Toronto.
Analysts say the combined company will be in a much better position to challenge industry giants Anheuser-Busch Cos., SABMiller PLC and others in the battle for China and other overseas markets as beer sales remain flat in North America.
Molson is facing diminishing market share in Canada and is still grappling with problems stemming from its Brazilian acquisition of Kaiser in 2002. Coors, meanwhile, has seen sales of leading brand Coors Light fall off in the United States, analysts say. Coors is the third biggest U.S. brewer after Anheuser-Busch (BUD), which makes Budweiser, and SABMiller's (search) Miller Brewing unit which makes Miller Lite.
The history between Molson and Coors began in 1998 when they began selling each other's products in their respective countries. Several years ago, they began talking about a potential merger, negotiations that began taking shape early last year.
Under the deal, each Molson Class B share will be exchanged for a 0.126 voting share and 0.234 nonvoting share of the combined company. Each Molson Class A share will be exchanged for 0.360 nonvoting share of Molson Coors. The exchange for Coors shareholders is one-for-one.
The deal appeared on shaky ground for months as several large Molson shareholders questioned whether they were getting enough money for their holdings.
Last month, the companies dramatically increased a special dividend for Molson shareholders to $4.53 per share U.S. from $2.71 U.S. under an earlier offer -- a 67 percent boost, or about $532.6 million. A rival bid from Ian Molson, the brewery's former deputy chairman, never emerged.
The Canadian brewery was built in Montreal on the banks of the St. Lawrence River in 1786 by John Molson, who was the driving force behind the city's first public hospital. Molson also was a major investor in Canada's first railroad, eventually linking the country from sea to sea.
Though described as a "merger of equals" by the companies, some in the French-speaking financial capital of Quebec describe the proposed merger as a U.S. takeover, largely because of the differences in their sizes. Others say just the opposite in Golden, where the company founded in 1873 is the largest employer and company executives are easily recognizable in the town's shops.
Coors shares rose 8 cents to $74.68 in afternoon trading on the New York Stock Exchange. They have traded in a 52-week range of $55.82 and $80.11.