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Canada, Toronto: A shareholder agreement between two funds controlled by warring members of the Molson family was terminated on Wednesday, November 10, helping clear the way for Molson Inc.'s planned merger with Adolph Coors Co. Pentland Securities, a fund indirectly owned by Molson's chairman Eric Molson said it had terminated an agreement with Swiftsure Trust, controlled by cousin Ian Molson, who is trying to mount a counter-bid for Canada's oldest brewer.

Pentland acquired 9,000 Molson class B shares on Nov. 9 giving the fund control over 50.1 percent of the voting shares, which allowed it to terminate the agreement that would have given Swiftsure a veto over the stock, Reuters revealed. Under the agreement, Pentland and Swiftsure could not sell their class B voting shares without offering them to the other fund first.

The agreement was to expire on Dec. 20, 2006, but was subject to earlier termination under a number of conditions, including if a party achieved a minimum threshold of Molson's class B shares. Ending the agreement clears a potential hurdle to the Montreal-based brewer's planned merger with Colorado-based Coors. "I think everybody expected it to happen, it was a necessary prerequisite to get this deal done," said Michael Palmer, president of Veritas Investment Research. "Each of them had a veto unless the other one owned more than 50 percent, and Eric obviously now owns more than 50 percent.

This move comes less than a week after Coors agreed to pay C$381 million to Molson's shareholders by way of a dividend, sweetening the deal ahead of a shareholder vote. In order for the merger to succeed, it needs the approval of shareholders representing two-thirds of both Molson's class A nonvoting and class B voting stock, as well as each class of Coors shareholders.

Molson expects to hold a shareholder vote the week of Dec. 13 and aims to close the deal in the last week of the year. If the merger succeeds, it will create the world's fifth largest brewer by volume. Shares of Molson fell 44 Canadian cents to close at C$33.06 on the Toronto Stock Exchange. Coors was down 62 cents at $70.65 in New York.


13 November, 2004