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Molson CEO Says Coors Deal on Track

September 13, 2004|From Bloomberg News

Molson Inc. Chief Executive Daniel J. O'Neill said he had not received any rival bids to a proposed merger of Canada's biggest beer maker and Adolph Coors Co., the No. 3 U.S. brewer.

Some investors have been counting on a competing offer for the family-run Canadian firm, including one from Ian Molson, who opposes the merger. Ian Molson, who holds 2.3 million Class B voting shares, or 10% of the votes, told the company in July that he might make an offer after he resigned as deputy chairman a month earlier.

"There's been nothing, no suggestion since the letters were received," O'Neill said. "We've not had any further communication."

O'Neill expects to win over Class A public shareholders by better explaining the $3.4-billion share swap in the three-month run-up to a vote on the deal.

O'Neill also said the company's proxy filing with securities regulators, which may come as early as today, would provide numbers that would "appeal to the rationale of shareholders."

Some investors with large stakes have said they will vote against the proposed merger. Jim Hall, who holds more than 287,000 Molson shares among the equivalent of $1.9 billion he helps manage at Mawer Investment Management of Calgary, Canada, is opposed. And a representative of Montreal investment firm Jarislowsky Fraser Ltd. said last week that the company planned to vote its 4.5 million shares against the proposal.

"It's a takeover without a premium," Hall said. "I'd prefer a conversion to an income trust. I would get a better value for my investment."

O'Neill said he opposed creating an income trust because it would not encourage Montreal-based Molson to expand.

"There is no Plan B. Plan A is to do the deal," he said.

Two-thirds of Molson's Class A and Class B shareholders must approve the Coors deal. The family controls at least 55% of Class B shares.

Molson Chairman Eric H. Molson, Ian Molson's cousin, would serve as board chairman of the combined company, and Coors CEO W. Leo Kiely III would be chief executive. Molson shareholders would own 55% of the new stock and those of Golden, Colo.-based Coors, 45%.

The proposed merger is expected to generate about $175 million in savings by 2007, the companies have said.

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