MILWAUKEE—SABMiller PLC, parent of Miller Brewing Co., and Molson Coors Brewing Co. took another step toward combining their U.S. operations, saying Friday they had signed a definitive agreement. The deal still requires regulatory clearance.
The two brewers, the nation’s second and third-largest respectively, announced plans to form MillerCoors in October in an effort to compete more effectively in a struggling domestic industry against market leader Anheuser-Busch Cos.
Milwaukee-based Miller, which makes brands like Miller Lite and Miller Genuine Draft, has about 18 percent of the market while Denver-based Molson Coors, maker of Coors Light, has about 11 percent.
Anheuser-Busch, the St. Louis-based brewer of Budweiser, Michelob and Bud Light, has nearly 50 percent of the market.
If the deal is completed, it will place almost 80 percent of the U.S. beer market in the hands of Anheuser-Busch and the MillerCoors joint venture.
The deal is being reviewed by federal antitrust regulators. Last month the companies announced they had received a second request for information from the Department of Justice.
Molson Coors Chief Executive Leo Kiely, who will head up the new venture, said the transaction is expected to close in mid-2008.
A filing with the Securities and Exchange Commission on Friday outlined a bit more about the new business, though it did not say where the new company’s headquarters will be. The filing said that Molson Coors will provide an initial cash contribution of between $50 million and $60 million. Both companies will share equal voting interest in the venture, but Molson Coors will have a minority economic ownership, with 42 percent, while London-based SABMiller will have a 58 percent interest.
The companies have said the joint venture will result in cost savings of $500 million over three years, mainly from reducing shipping distances, optimizing production and eliminating overlapping corporate and marketing services.
Shares of Molson Coors rose 61 cents, or 1.2 percent, to $52.01 in midday trading Friday.
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