The U.S. Securities and Exchange Commission is requesting documents related to Molson Coors Brewing Co.’s first quarter and the $3.4 billion merger that created the company.
The world’s fifth-largest brewer, which has its U.S. headquarters in Denver, disclosed the request in a regulatory filing Thursday. Investors appeared to shrug off the news, with shares of the company gaining 17 cents to close at $58.81 on the New York Stock Exchange.
Molson Coors spokeswoman Aimee Valdez said the brewer is cooperating with the SEC’s request.
Don Hoerl, associate regional director for the SEC in Denver, declined to comment.
The SEC’s move follows the filing of proposed class-action lawsuits alleging that leaders of A dolph Coors Co. and Molson Inc. misled investors about a decline in business prior to their Feb. 9 merger.
Both the lawsuits and the SEC request could provide a distraction to company leaders at a critical time, said Mark Swartzberg, managing director and beverage analyst at Legg Mason Wood Walker Inc. in New York.
“The company’s got a lot on its plate in terms of business issues,” he said.
The brewer is dealing with pressures on its Canadian business, which accounts for more than half its profit, he said.
“The market continues to contract, and they continue to lose market share. On top of that, their ability to raise prices is probably decreasing at a time when the need to do that is increasing,” he said.
In America, the brewer is contending with increased discounting led by Anheuser-Busch Cos., Swartzberg said.
Peter Seidman, a partner with New York-based Milberg Weiss Bershad & Schulman, commended the SEC for seeking information from the companies.
The class-action powerhouse filed a case against the brewer last month in Delaware. The suit alleges Molson and Coors concealed changes in the business so they could pull off their merger.
On April 28, Molson Coors reported a first-quarter loss of $46.5 million. It attributed the loss to weak sales and severance pay for departing executives. Analysts had anticipated a profit, and the results caused the stock to drop $14.30 to close at $63, a 19 percent drop.
On the same day, the company announced that vice chairman Daniel O’Neill – the Molson ex-chief executive who spearheaded the merger and was later tasked with wringing cost savings from it – would resign.
Shares of Molson Coors have dropped 20 percent since the merger was completed.
“We think it’s a good thing because there was obviously information about the company that was not disclosed to shareholders before they approved the merger,” Seidman said of the SEC’s move. “We’re in favor of any measure that brings that information to the public.”
In its filing Thursday, Molson Coors said it “believes that the lawsuits are without merit and will vigorously defend” itself.
Staff writer Kristi Arellano can be reached at 303-820-1902 or karellano@denverpost.com.
