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Molson Coors Now Largest US Brewery After MillerCoors Buy

By Zacks Investment ResearchStock MarketsOct 11, 2016 09:08PM ET
www.investing.com/analysis/molson-coors-now-largest-us-brewery-after-millercoors-buy-200158407
Molson Coors Now Largest US Brewery After MillerCoors Buy
By Zacks Investment Research   |  Oct 11, 2016 09:08PM ET
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After a long wait, Denver-based Molson Coors Brewing Company (NYSE:TAP) now has 100% ownership of MillerCoors after its acquisition of London-based SABMiller (LON:SAB) plc’s 58% share of the company for $12 billion. In addition, Molson Coors has acquired the Miller brand portfolio globally. It now has full rights to all the brands in the MillerCoors portfolio for the U.S. market, including Redd’s and import brands such as Peroni and Pilsner Urquell.

The deal makes Molson Coors the largest brewery in the U.S. and the third largest in the world, after Belgium-based Anheuser-Busch InBev (NYSE:BUD) and Dutch brewer Heineken NV (OTC:HEINY) .

MillerCoors was a joint venture of Molson Coors and SABMiller formed in 2008 that sells both companies' products in the U.S. Molson Coors had 42% stake before the acquisition. SABMiller sold its stake in MillerCoors to satisfy antitrust concerns of U.S. regulators as part of its planned merger with Anheuser-Busch InBev that closed on Monday.

MOLSON COORS-B Price and Consensus

MOLSON COORS-B Price and Consensus | MOLSON COORS-B Quote

MillerCoors will now operate as the U.S. business of Molson Coors, which includes the U.S. and Puerto Rico. Also, it will retain its name and headquarters in Chicago. MillerCoors is expected to provide 70% of Molson Coors’ total revenue.

Post this acquisition, Molson Coors’ annual revenue is anticipated to grow to $11.2 billion, increasing from $6.8 billion in 2015. Underlying earnings before income taxes, depreciation and amortization are projected to be $2.3 billion, up from $1.3 billion. Volumes will grow to 94 million hectoliters from 58 million.

This acquisition would also enable Molson Coors to improve scale and gain significant synergies, allowing it to cut costs quickly. As the U.S. beer market grows slowly, lower costs will help the company to increase its profits in the coming years.

Per reports, strong margins via cost savings and synergies, solid cash generation and stable top-line growth volume would result in double-digit EPS growth. Also, Molson Coors reportedly plans to announce a cost savings program of $900 million.

Zacks Rank

Currently, Molson Coors holds a Zacks Rank #2 (Buy).

Investors can also take a look at another beverage company, Constellation Brands Inc. (NYSE:STZ) , with a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Constellation Brands has posted an average positive earnings surprise of 24.01% in the trailing four quarters. The stock has a long-term earnings growth rate of 17.77%.

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MOLSON COORS-B (TAP): Free Stock Analysis Report

ANHEUSER-BU ADR (BUD): Free Stock Analysis Report

CONSTELLATN BRD (STZ): Free Stock Analysis Report

HEINEKEN NV (HEINY): Free Stock Analysis Report

Original post

Zacks Investment Research
Molson Coors Now Largest US Brewery After MillerCoors Buy
 
Molson Coors Now Largest US Brewery After MillerCoors Buy

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