Molson Coors Canada Inc. Class A · TSX:TPX.A
Molson Coors Canada Inc. Class A — Molson Coors Brewing Company — Merger or Acquisition (October 2007)
35 slides from Molson Coors Canada Inc. Class A's merger presentation, Oct 9, 2007
Slide 1: A Stronger, More Competitive U.S. Brewer
A Stronger, More Competitive U.S. Brewer Investor Presentation October 9, 2007
Slide 2: Forward looking statements
Forward looking statements This presentation includes “forward-looking statements” within the meaning of the U.S. federal securities laws, and language indicating trends, such as “anticipated” and “expected”. It also includes financial information, of which, as of the date of this press release, the
Slide 3: Pete Coors
Pete Coors Molson Coors Vice Chairman
Slide 4: Agenda
Agenda • Overview Pete Coors – Molson Coors Vice Chairman • Two complementary operations Graham Mackay – SABMiller CEO • One strengthened brewer Leo Kiely – Molson Coors CEO • Governance & transition Malcolm Wyman – SABMiller CFO • Questions & answers 4
Slide 5: A stronger, more competitive U.S. brewer
A stronger, more competitive U.S. brewer • Creates a stronger, brand-led U.S. brewer • Highly complementary assets and operating strategies • Significant, achievable synergies • Scale, resources and distribution platform to compete more effectively • Increases competitiveness of distributors • Great
Slide 6: A stronger, more competitive U.S. brewer
A stronger, more competitive U.S. brewer MillerCoors Voting interest 50% SABMiller 50% Molson Coors Economic interest 58% SABMiller 42% Molson Coors Leadership team Pete Coors – Chairman Graham Mackay – Vice Chairman Leo Kiely – Chief Executive Officer Tom Long – President and Chief Commercial Offic
Slide 7: Graham Mackay
Graham Mackay SABMiller CEO
Slide 8: A stronger, more competitive U.S. brewer
A stronger, more competitive U.S. brewer • Right structure, right time, right partners • Establishes an enhanced platform for growth • Responds to competitive dynamics • Superb brands, superb talent • Healthy momentum on both sides 8
Slide 9: Financial strength and enhanced scale
Financial strength and enhanced scale Pro forma US $millions unless otherwise indicated Miller1 Coors2 combined Net sales $3,940 $2,657 $6,597 EBITDA* $484 $358 $842 Beer shipments to wholesalers 45.3 23.7 69.0 (millions of barrels) ** Major breweries (#) 6 2 8 Employees (#) *** ~6,000 ~4,000 ~10,00
Slide 10: Two complementary operations
Two complementary operations Outperforming geographies are complementary ID Miller geographic skew Coors geographic skew 10
Slide 11: Two complementary operations
Two complementary operations Combined major plant locations: more complete national coverage Miller brewery Milwaukee Coors brewery 11 m brewing 12 m packaging Golden ID 22 m brewing 16 m packaging Shenandoah Trenton 7 m brewing 11 m brewing 8 m packaging 14 m packaging Irwindale 7 m brewing Eden 12
Slide 12: Two complementary operations
Two complementary operations Distribution increasingly overlapped Shared house territories 1997 2007 Shared houses 149 246 Total Miller volume 20% 62% Total Coors volume 20% 55% Pro forma Miller Coors 60% volume 12
Slide 13: Two complementary operations
Two complementary operations A complementary portfolio of existing brands Super Premium Premium Below Premium 13
Slide 14: Two complementary operations
Two complementary operations Similar current sales execution strategies • Enhancing general management competencies • Prioritizing investments through deeper consumer insights • Simplifying distributors’ ease of doing business • Increasing direct interaction with distributors and retailers 14
Slide 15: Two complementary operations
Two complementary operations Comparable recent moves toward local P&L accountability A common approach to local operations Field sales structures centered around local GMs Incentivized for profitable growth 15
Slide 16: Two complementary operations
Two complementary operations Increased current focus on national chain accounts Similar programs • Significant increases in key account coverage • More sophisticated selling capabilities • Better shopper insights to build the category image and value at retail • Separate channel marketing teams • Be
Slide 17: Two complementary operations
Two complementary operations Similar previously announced cost savings programs Miller Brewing Company Coors Brewing Company (Project Unicorn) (Resources For Growth) U.S. $millions FY 2008 FY 2009 U.S. $millions 2007 2008 Totals $37 $43 Totals $24 $27 Pre-current transaction Key elements Key element
Slide 18: Leo Kiely
Leo Kiely Molson Coors CEO
Slide 19: Strengthened player
Strengthened player • Be great brand builders • Continue strengthening our financial foundation • Create a winning and inspired culture 19
Slide 20: Strengthened player
Strengthened player Beer losing ground in the U.S. marketplace • Declining per-capita beer consumption • Increased consolidation of distributors and retailers • Continued growth in wine/spirits & imports/craft brands • Increased cost pressures 20
Slide 21: Cumulative volume change
Strengthened player Beer losing ground in U.S. marketplace Cumulative volume change +10% +5% 0 -5% -10% 2000 2001 2002 2003 2004 2005 2006 Spirits Wine Beer Cumulative percent change in servings versus 2000. Source – Beer Institute, Impact Databank, Adams Handbook, U.S. Census 21
Slide 22: Strengthened player
Strengthened player Miller and Coors have been disadvantaged in their ability to invest in the category % of net sales Miller1 Coors2 A-B3 MG&A* 27.0% 28.4% 16.3% EBIT** margin 9.3% 8.9% 17.3% • Both Miller and Coors have high relative overheads Result: lower margins and reduced ability to compete •
Slide 23: Synergies will increase competitiveness
Synergies will increase competitiveness Annual cost savings U.S. $millions Year 1 Year 2 Year 3 Total U.S. supply chain $0 $180 $50 $230 Brewing, packaging $0 $65 $10 $75 MG&A, overhead, other $50 $105 $40 $195 Incremental annual savings $50 $350 $100 $500 Aggregate savings in year $50 $400 $500 23
Slide 24: Synergies will increase competitiveness
Synergies will increase competitiveness Key synergy drivers Most significant factors Key implications / impacts Improved • Production at 8 major plants • Significantly lower freight costs • Flexible bottling configurations • Optimized production locations sourcing • Utilize full plant brewing and pa
Slide 25: Synergies will increase competitiveness
Synergies will increase competitiveness 600 MG&A, overhead, other $583 $500 Brewing, packaging 500 ($ U.S. Millions) U.S. supply chain $400 400 300 200 100 $50 Y1 Y1+Y2 0 Pro forma Year 1 Year 2 Year 3 combined EBIT* Synergies * Earnings before interest and taxes (excluding special items for Coors U
Slide 26: Enhanced investment in wide variety of brands
Enhanced investment in wide variety of brands Increased ability to invest in brand building and innovation • Solid track record of brand building and innovation • Access to parent company import brands • Catering to broadening consumer tastes and demand for choice 26
Slide 27: Transaction makes distributors more competitive
Strengthened player Transaction makes distributors more competitive Supply chain Sales calls logistics UPC code eCommerce management Merchandising Ordering Sales Training conferences 27
Slide 28: Significant benefits to retailers
Strengthened player Significant benefits to retailers • Ability to invest in innovative brands, packaging and retail programming • More choice and better service at retail • More distributor capability and flexibility to meet retailer needs • Provides retailers more competitive, credible alternative
Slide 29: Malcolm Wyman
Malcolm Wyman SABMiller CFO
Slide 30: Financial and structural factors
Financial and structural factors • Structure • Delaware LLC, to be treated as partnership for tax purposes • US holding companies • USA and Puerto Rico only • Debt and capital structure • Interest bearing debt outside the Joint Venture in US HoldCos • Initial analysis suggests neutral for ratings me
Slide 31: Financial management and effects
Financial management and effects • Distributions and funding • Agreed policy to distribute operating cash flows • Partners to fund capex and working capital requirements proportionate to economic interest • Synergies: $500 million per annum in third full financial year • Cost to achieve $450 million
Slide 32: Shareholder relationship matters
Shareholder relationship matters • Name of venture to include “MillerCoors” • Miller Coors headquarters to be decided; significant presence will continue in both Milwaukee and Golden • All breweries in system are critical to achieving synergies • Brand protocols to manage the relationship between th
Slide 33: Deal matters
Deal matters • Break-up fee • Conditions • Due diligence and negotiation of definitive agreements • Regulatory and other consents/clearances • Molson Coors Class A shareholders • Timetable • U.S. Hart-Scott-Rodino (antitrust) filing expected in the near term • Definitive agreement expected by Decemb
Slide 34: A stronger, more competitive U.S. brewer
A stronger, more competitive U.S. brewer • Creates stronger, more competitive U.S. brewer • Highly complementary assets and operating strategies • Significant, achievable synergies • Increases competitiveness of distributors • Clear benefits to consumers and retailers • Shared ownership and manageme
Slide 35: A Stronger, More Competitive U.S. Brewer
A Stronger, More Competitive U.S. Brewer Investor Presentation October 9, 2007
Molson Coors Brewing Company — Merger or Acquisition (October 2007) on 6ix