Molson Coors Brewing, the world’s fifth largest brewer, reported frothy earnings today, which could help strengthen its bid for Canada’s third-largest brewer, Sleeman Breweries.
Denver-based Molson Coors reported second quarter earnings more than four times higher than the same period a year before, due in part to tax rate reductions in Canada and an increase in sales volume.
Net income was $156.2 million, or $1.81 per diluted share, up sharply from $38.5 million, or 45 cents per diluted share, a year ago, the company said. Analysts had predicted the company would see $1.51 per share in revenue.
“We believe a (Sleeman purchase) would be readily digestible to (Molson Coors) in financial terms and see strategic merit to a combination,” Mark Swartzberg, a beverage analyst at Stifel Nicolaus in New York said in an industry report.
Representatives for Molson Coors and Sleeman, worth an estimated $220 million and based in Ontario, declined to comment. Sleeman said in May that it was looking for a buyer. Bidding is expected to close Friday, an industry analyst said, declining to be named.
InBev’s Labatt Brewing Co., Grolsch and Sapporo are also expected to bid on Sleeman, according to Swartzberg, who referenced the Canadian Globe and Mail newspaper in his report.
Molson and Labatt each have about 42 percent share of the Canadian beer market, Swartzberg said. Sleeman, which sells its own brands and also distributes Stroh’s Canada, has close to 7 percent.
Double-digit second quarter sales were driven by Coors Light, said Leo Kiely, Molson Coors president and chief executive officer, leading Molson Coors’ top brands, which include Molson, Coors, Rickard’s, Killian’s and Carling.
“We grew sales volume in all three of our businesses, led by the strength of our strategic brands,” Kiely said.
Molson Coors said it saw $27 million in cost savings in the second quarter, but those savings were negated by increased transportation and commodity costs.Canada’s formerly family-owned Molson and Coors, founded in 1873 in Golden, Colo., merged in 2005.
Staff writer Beth Potter can be reached at 303-820-1503 or bpotter@denverpost.com.
