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LONDON and DENVER -- SABMiller plc and Molson Coors Brewing Co. were notified by the Antitrust Division of the U.S. Department of Justice (DOJ) that it has completed its Hart-Scott-Rodino antitrust review of the two companies proposed joint venture, and has closed its investigation. As a result, the companies are therefore free to proceed with the combination of their U.S. and Puerto Rico operations to form a new company called MillerCoors, the companies stated.
"We are very pleased the U.S. Department of Justice has given us clearance to proceed with the planned MillerCoors joint venture," Graham Mackay, SABMiller's chief executive, said in a statement. "[Yesterday's] news underscores our strong belief that this combination will not only generate significant growth and cost synergies, but will also create tremendous opportunities for innovations in products and services that will greatly benefit America's beer distributors, retailers and consumers."
On Oct. 9, 2007, SABMiller and Molson Coors Brewing Co., the No. 2 and No. 3 beer makers in the U.S., respectively, announced plans to combine the U.S. and Puerto Rico operations of their respective subsidiaries, Miller and Coors, in a joint venture called MillerCoors.
The two companies will each have a 50 percent voting interest in the joint venture and have five representatives each on its board of directors, the company stated. Based on the economic value of the contributed assets, SABMiller will have a 58 percent interest in the joint venture, while Molson Coors will have a 42 percent interest, according to the companies.
The companies expect the transaction to generate approximately $500 million in annual cost synergies to be delivered in full by the third full financial year of combined operations.
A Times Online report published when the merger was announced in October 2007, stated that the combined businesses will be worth $10 billion, will generate $500 million in cost savings and hold a combined U.S. market share of about 30 percent, still below the 50 percent held by Anheuser-Busch.
The $500 million in savings will primarily come from distribution and sales, SABMiller chief executive Graham Mackay said in a Reuters report when the plan was announced, adding that there will be no closures for the eight breweries operated between the two companies.
Citi analyst Bonnie Herzog told Reuters in October 2007 the deal will change the U.S. beer market into a duopoly, be positive for Molson Coors and could accelerate Anheuser-Busch's eventual combination with the world's largest brewer, Belgium-based InBev.
"MillerCoors is quickly moving toward becoming a reality, and I'm looking forward to working with the entire team to build on our momentum and grow our leading brands and consumer offerings," Leo Kiely, CEO of Molson Coors, said in a statement. "While we recognize that regulatory clearance is just one step in creating a dynamic U.S. competitor, it is a critical milestone, and we're obviously very happy about the outcome. We're actively engaged in the various planning elements and are ready to get out of the gate smoothly and quickly upon close."
The transaction is expected to be completed on approximately June 30, 2008, and until then, the Miller and Coors businesses will continue to be operated separately, according to the company.