Shareholders of Canada’s biggest company, Molson Inc., on Friday voted overwhelmingly in favor of merging with Adolph Coors Co., the third-largest brewery in the United States.
The $6 billion merger would form the world’s fifth-largest brewery if Coors shareholders also approve next Tuesday, as widely expected.
The combined Molson Coors Brewing Co., with headquarters both in Montreal and Denver, would own brands that include Coors Original, Coors Light, Keystone, Molson Canadian and Carling.
Molson officials said that more than 80 percent of the shareholders agreed to the merger, whose chances were increased earlier this month after the brewers dramatically increased a special dividend to persuade wavering Molson shareholders to approve their deal.
“Molson management and the board are very pleased that shareholders have supported the merger and understood the strategic and economic value of the transaction,” Molson Chairman Eric Molson said in a statement after the vote, which took less than 45 minutes.
He said the merger creates a company “with the operational scale and the financial strength to compete in the rapidly consolidating global beer market.”
Warren Chippindale, a former director of Molson, said shareholders understood that it was likely the best offer they would get.
“I think that it was generous of the Molsons to offer the special dividends and not take it for themselves,” Chippindale told reporters after voting himself. He shrugged off concerns that yet another Canadian industry was being dominated by U.S. interests.
“It’s a big world and that’s where the market is,” he said. “I would rather see this kind of a merger than a takeover by a Miller or something like that.”
The brewing giant SABMiller PLC had indicated it would be interested in making a bid for Molson should the pending merger with Coors fall through.
Earlier this month, the Canadian brewer and Golden, Colo.-based Coors dramatically increased a special dividend to persuade wavering Molson shareholders to approve their deal. The sweetened offer came after several shareholders, including some with significant holdings, said they would oppose the merger because they did not believe they would receive fair value for their stock.
It boosted the dividend to Molson shareholders to $4.53 US per share from $2.71 per share, or about $532.6 million in all.
Molson Chairman Eric Molson, a member of the Canadian-based brewer’s founding family, agreed to waive participation in the dividend, which amounted to about $50 million.
Shareholder Francois Perreault said he was going to oppose the merger until the dividend deal.
“Molson wasn’t really giving us a good deal. It could have been involved with more international corporations,” said Perreault, after voting in favor of the merger on Friday, saying the dividend “pushed me over the edge.”
Coors spokeswoman Laura Sankey said the company was pleased with the results of the Molson shareholder vote.
“We’re confident that our shareholders will approve the merger,” she said. “The proxies we have received to date already indicate a majority have voted to approve the merger.”
Molson told shareholders on Friday that a vote by option holders Thursday was overwhelmingly in favor of the merger.
Several shareholders have contended the proposed merger was not equitable and did not give them enough money for their holdings. In past months, many analysts and shareholders have suggested an increased dividend or premium.
Ian Molson, the brewery’s former deputy chairman who tried unsuccessfully to mount a rival bid for Molson, said he would vote against the merger, calling it a “bad transaction” for Molson shareholders. He said Molson, which has a larger market capitalization and stronger domestic base, would shift to a new U.S. headquarters with two Coors executives in charge.
“In my judgment, Molson has an ongoing ability to create value for its shareholders, substantially in excess of what is offered by way of the Coors merger proposal,” Molson said in a statement earlier this month. “Molson should not be afraid of the future.”
Though described as a “merger of equals” by the two companies, some in the French-speaking financial capital of Quebec describe the proposed merger as a U.S. takeover, largely because of the differences in their sizes. Others say just the opposite in Golden, where the company founded in 1873 is the largest employer in a much smaller town.
Last year, Molson had sales of $2.8 billion compared with Coors’ $5.4 billion.