updated 9/8/2004 1:04:58 PM ET 2004-09-08T17:04:58

Canadian brewer Molson Inc.'s proposed merger with Adolph Coors Co. may lack sufficient shareholder support because there soon may be another offer to consider, Molson's chief executive was quoted Wednesday in a newspaper interview.

CEO Dan O'Neill told The Globe and Mail, a Toronto-based newspaper, that the proposed deal is the best for shareholders, but wavered on whether enough of the company's class-A nonvoting shareholders were convinced.

"I don't know at this point. I don't know. I think the overall feeling that we have is there's still a lot of skepticism for the principal reason that people feel there will be another offer coming," said O'Neill.

Under the proposed agreement with Coors, Molson shareholders would receive 0.36 shares of a new Molson Coors, or roughly $24.36 a share at Tuesday's closing prices, for each Molson share. Coors shareholders would trade their stock one for one.

O'Neill said many of his colleagues doubt whether a rival bid, from a group led by former vice chairman Ian Molson, will ever surface. But he said he has not ruled out the possibility.

The anticipated Ian Molson bid, which is believed to involve Toronto-based Onex Corp. and possibly another brewery, is expected to be in the $3.8 billion range, which would put a value of about $30 on each Molson share.

O'Neill said other investors would have to overcome the threat of Coors abandoning its valuable partnership with Molson if the deal does not go ahead.

Molson and Coors brew each other's beers and share the profits, which account for about 20 per cent of Molson's share price.

"If anyone comes in and gives us an offer for the company, certainly we'll evaluate it because legally you have to and it's the right thing to do. And the board will openly consider it," O'Neill said.

The CEO was traveling Wednesday and could not be reached for comment, his office said. A company spokeswoman had not returned calls to The Associated Press by midday.

The Molson-Coors proposal needs approval by two-thirds of the holders of each class of shares, voting and nonvoting. The voting shares are controlled by chairman Eric Molson, who could block a rival bid.

But the nonvoting shares are believed to be in the hands of funds and retail investors who aren't thrilled by the prospects of the Molson-Coors merger.

The proposed merger has been criticized because it does not deliver a takeover premium to shareholders, and because some analysts and investors doubt whether the two family breweries will be able to realize their goal of achieving cost savings from the deal worth $133 million a year.

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