E-Malt.com News article: 4177
Canada: Former Molson Inc. executive Ian Molson has sold more than 43 % of his shares in Molson's voting stock after his critical comments on the Coors-Molson merger, which is scheduled to close today, February 9, according to Denver Post. Adolph Coors Co. and Molson also will issue earnings reports on February 9. Analysts expect Molson to report diminished profit margins and a sharp decline in net income because of competition from lower-priced Canadian beers.
The creation of Molson Coors Brewing Co. ends a merger drama that began in July and culminated in recent weeks with shareholders of both companies giving their approval. The deal will create the world's fifth-largest brewer, bringing together companies that have a combined 351 years of family management.
From Jan. 28 to Feb. 2, Ian Molson sold 1 million of his 2.3 million shares of Molson's Class B stock, which is controlled by Molson chairman Eric Molson.
Ian Molson, a distant cousin of Eric, has been a vocal critic of merging the two family-run breweries. He attempted, but failed, to launch a hostile takeover last year of Montreal- based Molson to derail the merger with Coors. In his only public comments on the merger, issued Jan. 11, Molson described the deal as "a bad transaction" for Molson shareholders that would cause the "disappearance of the institution called Molson."
Molson's dissatisfaction with the merger left analysts unsurprised that he sold a large chunk of his shares. "For Ian, the glass is definitely half-empty, not half-full, under a merger with Coors," said brewing analyst David Hartley of Toronto-based First Associates.
Hartley said Molson today will report "a decline in earnings ... and we're expecting profit margins to decline substantially." He said Molson is likely to report diminished market share in its troubled Brazilian brewing operations.
Analyst Michael Palmer of Veritas Investment Research Corp. in Toronto said Molson has been hurt by competition from low-priced Canadian beers. "There's been a huge swing to cheaper beer," Palmer said. "Molson has been forced to lower its prices to compete with this trend." He said he expects Molson to report a double-digit percentage decline in earnings before interest and taxes.
09 February, 2005