Actionable news
All posts from Actionable news

MolsonCoors Has A Dump On TAP


MoolsonCoors is up 25% in one month on possible AB InBev-SABMiller takeover deal.

MolsonCoors may be able to get a first hand at SABMillers's 58% stake in MillerCoors it cannot afford.

There are three "If's" and a few more "may's" in the brewing brewery deal.

Those of you who follow MolsonCoors or have had your "top-gainers" scan on yesterday noticed that shares of MolsonCoors (NYSE:TAP) have spiked some 10 percent on what seems to be a deal that barely concerns them.

AB InBev (NYSE:BUD), the world's number one beer producer, has been attempting to accomplish a deal to take over #2 SABMiller for a whopping $106 billion. Sounds awesome to the shareholders, but there is a brewing company stock that has benefited its shareholders more than the two companies engaged in the deal. There are a couple of problems with the deal:

  1. When and if the two companies merge, AB InBev will have a 29% market share worldwide. The antitrust committee is going to have a problem with that, since the closest competitor (Heiniken) has only about 9%. As the result, some of SABMiller's assets will have to be sold off to please the regulators (if regulators don't let the deal through, AB InBev will have to pay SABMiller a $3 billion dollar penalty)
  2. SABMiller is offered a deal where 42.15 GBP per share ($43 billion worth) will be paid in cash and the rest in stock. AB InBev shares that will be acquired by SABMilller shareholders will have a 5-year lockup, without a permission to sell. That is unlikely to fly with the shareholders, knowing that AB InBev's sales have been sliding over the last 2 years (they will be stuck with shares, which seem to be getting cheaper)

I am not as much concerned about the deal between the two companies, but the benefit it 'may' have for MolsonCoors, whose shares have risen from $68 per share to $88 per share in 30 days in speculation of the deal. MolsonCoors already owns 42% of MillerCoors, whose main market is in the U.S. and Canada. Traders speculate that 'if' regulators will ask for SABMiller's 58% stake in the company to be sold, MolsonCoors will be the one...