NEW SUDS DEAL

Coors, Miller Brew Up Partnership

OCTOBER 12, 2007 — The makers of Coors and Miller Lite plan to combine their U.S. brewing operations in an effort to compete better against industry leader Anheuser-Busch, reports the Associated Press.

The joint venture announced Tuesday will be known as MillerCoors and will have responsibility for selling brands including Miller Lite, Miller Genuine Draft, Coors, Coors Light and Molson Canadian in the U.S.

Anheuser-Busch Cos. accounts for about half of the U.S. market with brands such as Budweiser, Michelob and Bud Light.

SABMiller PLC will have a 58 percent economic interest in the venture and MolsonCoors Brewing Co. will own 42 percent of the new company. They will have equal voting interests, however.

Precise financial terms of the deal were not disclosed.

“It is clear Miller and Coors will be a stronger, more competitive U.S. brewer than either company can be on its own,” said Molson Coors chief executive Leo Kiely, who will be the new CEO of the joint venture.

The joint venture will also result in cost savings of $500 million, the companies said. That savings will mainly come from reducing shipping distances, finding economies of scale in brewing operations, optimizing production and eliminating duplicate corporate and marketing services.

London-based SABMiller, which brews Miller Lite as well as a slew of European beers, and Colorado-based Molson Coors, the brewer of Coors Light and the craft beer Blue Moon, will each have five representatives on its board of directors.

Under the terms of the agreement, the companies said they will conduct all of their U.S. business exclusively through the venture.

The companies project MillerCoors will have combined annual beer sales of 69 million U.S. barrels with revenue of about $6.6 billion.

Coors said the joint venture will allow both companies to compete for U.S. consumers who are “looking for greater choice and differentiation,” as wine and spirits continue to entice beer drinkers, and imports and craft beers garner a larger share of the market.

The companies said by combining their U.S. operations, the venture will be able to invest more in marketing its brands to consumers and compete more effectively with larger brewers like Anheuser-Busch and InBev NV S.A., which imports a large number of global beers into the U.S. and is the world’s largest brewer by volume.

SABMiller chief executive Graham Mackay said on a conference call with analysts the two companies will complement each other geographically, because Miller is strong in the central region down through Texas, while Coors has a strong reach in the West and parts of the Northeast. Coors’ two breweries and Miller’s six will remain open, executives said.