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Molson Coors to Use Notes Offering Proceeds for Miller Stake
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Molson Coors Brewing Company’s (TAP - Free Report) wholly-owned indirect subsidiary Molson Coors International LP has recently priced its previously announced senior notes worth C$ 1 billion, consisting of C$500 million principal amount of 2.840% Senior Notes due 2023 and C$500 million principal amount of 3.440% Senior Notes due 2026 in Canada.
The notes offering is expected to close by Jul 7. Molson Coors is expected to use the proceeds of approximately C$996 million to partially fund the previously announced acquisition of SABMiller plc's 58% interest in MillerCoors LLC from Anheuser-Busch InBev (BUD - Free Report) . It will also fund all other assets primarily related to the Miller brand portfolio outside of the United States and Puerto Rico, and pay related fees and expenses of the acquisition. The remaining funding will be done by raising additional debt financing in international markets.
Prior to the consummation of the deal, Molson Coors intends to invest the net proceeds from this offering in U.S. government securities, short-term certificates of deposit, cash equivalents, money market funds or other short-term investments or demand deposit accounts. However, if the acquisition does not materialize, the notes will be subject to a special mandatory redemption.
Denver-based Molson Coors already owns 42% of MillerCoors, its joint venture with SABMiller. It agreed to purchase SABMiller’s stake in MillerCoors in November. However, Molson Coors’ acquisition of the remaining Millers Coors is conditioned upon the closing of AB InBev’s $107 billion takeover of SABMiller, which is expected in the second half of 2016.
Anheuser Busch reached a deal to acquire London-based SABMiller in Oct 2015. On May 25, 2016, the two big global beer companies received approval to merge from the European Union's (EU) competition regulator, the European Commission. However, the deal is yet to receive shareholders’ and regulatory approval.
Besides purchasing SABMiller’s 58% stake in MillerCoors, Molson Coors plans to buy the Miller brand portfolio globally and retain the rights to all the brands currently in the MillerCoors portfolio for the U.S. market, including Redd’s and import brands such as Peroni and Pilsner Urquell.
Molson Coors’ purchase of SABMiller’s stake would allow it to take strategic control of its operations in its biggest market. Molson Coors would also be in a position to gain significant synergies, which would allow the company to cut costs quickly. As the U.S. beer market grows slowly, lower costs will help Molson Coors to increase its profits in the coming years.
Per the Wall Street Journal, the purchase of SABMiller’s stake in the joint venture could add nearly 50% to Molson Coors’ earnings per share, besides allowing the company to cut nearly $400 million in costs.
Molson Coors currently carries a Zacks Rank #1 (Strong Buy). A stock worth considering in the consumer staples space is Post Holdings, Inc. (POST - Free Report) carrying the same Zacks Rank as Molson Coors.
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Molson Coors to Use Notes Offering Proceeds for Miller Stake
Molson Coors Brewing Company’s (TAP - Free Report) wholly-owned indirect subsidiary Molson Coors International LP has recently priced its previously announced senior notes worth C$ 1 billion, consisting of C$500 million principal amount of 2.840% Senior Notes due 2023 and C$500 million principal amount of 3.440% Senior Notes due 2026 in Canada.
The notes offering is expected to close by Jul 7. Molson Coors is expected to use the proceeds of approximately C$996 million to partially fund the previously announced acquisition of SABMiller plc's 58% interest in MillerCoors LLC from Anheuser-Busch InBev (BUD - Free Report) . It will also fund all other assets primarily related to the Miller brand portfolio outside of the United States and Puerto Rico, and pay related fees and expenses of the acquisition. The remaining funding will be done by raising additional debt financing in international markets.
Prior to the consummation of the deal, Molson Coors intends to invest the net proceeds from this offering in U.S. government securities, short-term certificates of deposit, cash equivalents, money market funds or other short-term investments or demand deposit accounts. However, if the acquisition does not materialize, the notes will be subject to a special mandatory redemption.
MOLSON COORS-B Price and Consensus
MOLSON COORS-B Price and Consensus | MOLSON COORS-B Quote
Denver-based Molson Coors already owns 42% of MillerCoors, its joint venture with SABMiller. It agreed to purchase SABMiller’s stake in MillerCoors in November. However, Molson Coors’ acquisition of the remaining Millers Coors is conditioned upon the closing of AB InBev’s $107 billion takeover of SABMiller, which is expected in the second half of 2016.
Anheuser Busch reached a deal to acquire London-based SABMiller in Oct 2015. On May 25, 2016, the two big global beer companies received approval to merge from the European Union's (EU) competition regulator, the European Commission. However, the deal is yet to receive shareholders’ and regulatory approval.
Besides purchasing SABMiller’s 58% stake in MillerCoors, Molson Coors plans to buy the Miller brand portfolio globally and retain the rights to all the brands currently in the MillerCoors portfolio for the U.S. market, including Redd’s and import brands such as Peroni and Pilsner Urquell.
Molson Coors’ purchase of SABMiller’s stake would allow it to take strategic control of its operations in its biggest market. Molson Coors would also be in a position to gain significant synergies, which would allow the company to cut costs quickly. As the U.S. beer market grows slowly, lower costs will help Molson Coors to increase its profits in the coming years.
Per the Wall Street Journal, the purchase of SABMiller’s stake in the joint venture could add nearly 50% to Molson Coors’ earnings per share, besides allowing the company to cut nearly $400 million in costs.
Molson Coors currently carries a Zacks Rank #1 (Strong Buy). A stock worth considering in the consumer staples space is Post Holdings, Inc. (POST - Free Report) carrying the same Zacks Rank as Molson Coors.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>