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Canada, Toronto: Reports of a family feud at North America's oldest brewery have prompted talk that Molson Inc. could soon be up for sale, sending the stock up as much as 3 % on June 18, Reuters posted on the same day. One family member of the closely controlled owned company, deputy chairman Ian Molson, is not standing for re-election at next week's annual meeting, and the size of the board will fall to 8 to 10, from recent levels as high as 20. It certainly signifies crisis in their leadership, and who knows where it will go, but I think they might be more open to takeover mergers than they have been previously," said Krista Mackay, an analyst with Salman Partners Inc.

The Molson family, which controls more than 60 % of the Class B voting shares of the Montreal-based company, has always been adamant about not selling the company, which is known for its Canadian, Export and Bavaria brands. Shares of Molson rose as high as C$33.55 % retreating to C$33.25 on the Toronto Stock Exchange, for a gain of 75 Canadian cents, or 2 % on Friday, and a gain of 2.7 % from last week.

The shareholders meeting, to take place in Montreal on Tuesday, will also discuss board member Daniel Colson's reappointment to the board. Colson, the vice-chairman of scandal-plagued Hollinger International Inc., has come under fire from at least one institutional investor that has said it will vote against his reappointment.

The dispute about board members all comes as the venerable brewer, founded in 1786, has been fighting to bring its Brazilian unit to profitability. This week, in what some analysts see as a strategic move, Molson said Robert Coallier, chief executive of the Kaiser operations for the past two years, would be called back to Canada and Brazilian native Fernando Tigre would take the helm at Kaiser.

"It's an admission that (Coallier) was not the right guy to run the business in Brazil," said Bill Chisholm, analyst with Dundee Securities Corp. "Certainly the management changes clearly is an indication that they don't have an answer yet as to how to make Brazil profitable ... if it doesn't turn around this year, by the beginning of '05 they will have to consider selling it."

Molson bought Brazil's Kaiser brewery for $765 million in 2002, but the venture has proved a drain on the Canadian company's profits. Last month it reported falling sales volumes and rising costs for its Brazilian operation, reflecting the creation of a separate sales team based in Sao Paolo.


23 June, 2004