SABMiller Plc and Molson Coors Brewing Co. said they have signed a letter of intent to combine the U.S. and Puerto Rican operations of their respective subsidiaries, Miller and Coors, in a joint venture to be called MillerCoors.
The new company will have estimated annual sales of 69 million U.S. barrels and net revenue of approximately $6.6 billion. Pro forma combined profits are estimated at $842 million. The stated goal was to compete more effectively in the increasingly competitive U.S. marketplace, according to the joint statement.
Pete Coors, vice chairman of Molson Coors, will become chairman of MillerCoors. Graham Mackay, SABMiller CEO, will serve as vice chairman. Leo Kiely, current CEO of Molson Coors, will be the CEO of the joint venture, and Tom Long, current CEO of Miller, will be president and chief commercial officer.
The deal apparently does not include operations outside of the U.S. and Puerto Rico. SABMiller and Molson Coors expect the transaction to generate approximately $500 million in annual cost synergies to be delivered in full by the third full year of combined operations.
SABMiller and Molson Coors each will have a 50 percent voting interest in the joint venture and have five representatives each on its board of directors. Based on the economic value of the contributed assets, SABMiller will have a 58 percent economic interest in the joint venture and Molson Coors will have a 42 percent stake.
Read the joint statement here.