Molson Coors Beverage Company · NYSE:TAP
Molson Coors Beverage — Molson Coors Brewing — Merger or Acquisition (October 2007)
35 slides from Molson Coors Beverage'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, Molson Coors Vice Chairman
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
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 Greater choice fo
Slide 6: MillerCoors: A stronger, more competitive U.S. brewer
MillerCoors A stronger, more competitive U.S. brewer 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, SABMiller CEO
Graham Mackay SABMiller CEO
Slide 8: Right structure, right time, right partners
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 A stronger, more competitive U.S. brewer
Slide 9: Financial strength and enhanced scale
Financial strength and enhanced scale US $millions unless otherwise indicated Miller1 Coors2 Pro forma combined Net sales $3,940 $2,657 $6,597 EBITDA* $484 $358 $842 Beer shipments to wholesalers (millions of barrels) ** 45.3 23.7 69.0 Major breweries (#) 6 2 8 Employees (#) *** ~6,000 ~4,000 ~10,00
Slide 10: Outperforming geographies are complementary
Outperforming geographies are complementary Two complementary operations Miller geographic skew Coors geographic skew
Slide 11: Combined major plant locations: more complete national coverage
Two complementary operations Combined major plant locations: more complete national coverage Golden 22 m brewing 16 m packaging Shenandoah 7 m brewing 8 m packaging Irwindale 7 m brewing 12 m packaging Fort Worth 9 m brewing 15 m packaging Albany 10 m brewing 12 m packaging Eden 10 m brewing 11 m pa
Slide 12: Distribution increasingly overlapped
Two complementary operations Distribution increasingly overlapped 1997 2007 Shared houses 149 246 Total Miller volume 20% 62% Total Coors volume 20% 55% Shared house territories Pro forma Miller Coors volume 60%
Slide 13: A complementary portfolio of existing brands
Two complementary operations A complementary portfolio of existing brands Super Premium Premium Below Premium
Slide 14: Enhancing general management competencies
Two complementary operations Enhancing general management competencies Prioritizing investments through deeper consumer insights Simplifying distributors’ ease of doing business Increasing direct interaction with distributors and retailers Similar current sales execution strategies
Slide 15: Comparable recent moves toward local P&L accountability
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
Slide 16: Increased current focus on national chain accounts
Two complementary operations Increased current focus on national chain accounts 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 Better engagement with field
Slide 17: Similar previously announced cost savings programs
Two complementary operations Similar previously announced cost savings programs Coors Brewing Company (Resources For Growth) U.S. $millions 2007 2008 Totals $24 $27 Key elements World class manufacturing Asset care initiatives Procurement savings Freight savings Key elements Global supply chain Over
Slide 18: Leo Kiely, Molson Coors CEO
Leo Kiely Molson Coors CEO
Slide 19: Strengthened player: strategic priorities
Be great brand builders Continue strengthening our financial foundation Create a winning and inspired culture Strengthened player
Slide 20: 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 Strengthened player Beer losing ground in the U.S. marketplace
Slide 21: Beer losing ground in U.S. marketplace
Strengthened player Beer losing ground in U.S. marketplace Cumulative volume change 0 -5% -10% +5% +10% Spirits Wine Beer Cumulative percent change in servings versus 2000. Source – Beer Institute, Impact Databank, Adams Handbook, U.S. Census 2000 2001 2002 2003 2004 2005 2006
Slide 22: Miller and Coors disadvantaged in ability to invest in the category
Strengthened player 1 Fiscal 2007 results. 2 Fiscal 2006 results, excluding special items. 3 Fiscal 2006 results. 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 a
Slide 23: Synergies will increase competitiveness
$500 $100 $350 $50 Incremental annual savings 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 Aggregate savings in year $50 $400 $500 Synergies will increase competitiveness
Slide 24: Key synergy drivers
Most significant factors Key implications / impacts Improved sourcing Production at 8 major plants Flexible bottling configurations Utilize full plant brewing and packaging capacity Increase direct brewery shipments/reduce distance Maximize container joint venture Significantly lower freight costs O
Slide 25: Synergies will increase competitiveness
Synergies will increase competitiveness MG&A, overhead, other Brewing, packaging U.S. supply chain ($ U.S. Millions) $583 $50 $400 $500 Y1 Y1+Y2 * Earnings before interest and taxes (excluding special items for Coors U.S.) for the 4 quarters ended March 2007. Synergies 0 100 200 300 400 500 600 Pro
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
Slide 27: Transaction makes distributors more competitive
Strengthened player Transaction makes distributors more competitive Merchandising Sales calls Ordering Supply chain logistics Training Sales conferences eCommerce UPC code management
Slide 28: Significant benefits to retailers
Strengthened player 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 Category Captain to optimize space and at
Slide 29: Malcolm Wyman, SABMiller CFO
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 metrics, prior t
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 over two
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 the JV’s b
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 December 2007, due dil
Slide 34: Creates 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 management team – best of both companies A logical combinatio
Slide 35: A Stronger, More Competitive U.S. Brewer
A Stronger, More Competitive U.S. Brewer Investor Presentation October 9, 2007
Molson Coors Brewing — Merger or Acquisition (October 2007) on 6ix