MILLER AND COORS CREATE U.S. JOINT-VENTURE

A rumor that has swirled in the industry for years turned to fact yesterday. Our sister publication, Beer Business Daily, was the first to report that SABMiller and Molson Coors have signed a letter of intent to create a US (and Puerto Rico) joint venture, essentially combining their US operations. Such a deal in the US would create about $500 million in cost savings.

SABMiller and Molson Coors will each have a 50% voting interest in the joint venture and have five representatives each on its Board of Directors. Based on the economic value of the contributed assets, SABMiller will have a 58% economic interest in the joint venture and Molson Coors will have a 42% economic interest.

Pete Coors, Vice Chairman of Molson Coors, will serve as Chairman of MillerCoors. Graham Mackay, SABMiller CEO, will serve as Vice Chairman of MillerCoors. Leo Kiely, current CEO of Molson Coors, will be the CEO of the joint venture, and Tom Long, current CEO of Miller, will be appointed President and Chief Commercial Officer.

The deal is expected to close by the end of the year if the regulatory process can be completed. Most people in the beer industry (except for perhaps Anheuser-Busch and a few others) view this as a positive development.