E-Malt.com News article: 3305

Canada: Molson Inc. defended its plan to allow employees to use their stock options to vote on its proposed merger with Colorado-based Adolph Coors Co., saying on Monday September 20 that they were "entitled to vote", Reuters revealed. "It's something that in our lawyers' view and our board's view is absolutely correct and the basis for saying that is that Molson optionholders are stakeholders in the corporation and by virtue of that should be entitled to vote," said Molson's spokeswoman Sylvia Morin.

According to a proxy statement released late last Friday, Molson's optionholders will be entitled to one vote for each class A nonvoting share, in effect giving the company potentially 3 percent more in favor of the merger. The merger requires approval of two-thirds of both class A nonvoting and class B voting shareholders of Montreal-based Molson. But with the board chairman, Eric Molson, controlling about 50 percent of the voting power, the fate of the merger seems up to the class A shareholders. So far, two minority shareholders have voiced concern of Molson's plan to give optionholders a vote.

"I think it's absolutely immoral for a board of directors to stoop so low in order to win something for a family," said Stephen Jarislowsky, chairman of Jarislowsky Fraser Ltd. which holds a minority stake in Molson. "It gives rights to people who have an absolute conflict of interest and are working for the company and who have been dangled an enormous benefit in millions of dollars if the merger takes place."

The other minority shareholder, Ontario Teachers' Pension Plan, was also outraged and said it would block the action in court if need be. "We're unhappy enough about this that we will make our voice heard, no question about it," said Claude Lamoureux, president and chief executive at one of Canada's largest pension funds. "It's a way for the company to skew the vote in its favor." He would not comment on which way the fund is leaning.

Analysts and strategists attacked Molson for allowing employees who basically have not paid for their stock to have the same vote as someone who has paid for their stock. U.S. regulators called the move "rare," while Canadian regulators said it was "not unprecedented".

Morin pointed to a number of mergers that have granted optionholders the right to vote, including the union between Alberta Energy and PanCanadian Energy, which formed EnCana Corp. deal.

Meanwhile, investors have cooled to the idea that Ian Molson, the company's former deputy chairman and Eric Molson's cousin, will come back with a successful higher offer. According to the proxy statement, Ian Molson is working with a group of investors to acquire Molson for C$40 a share.

When Molson announced plans to merger with Coors in July, its stock jumped 3 percent to C$35.70 on speculation that a higher offer would emerge. Since then, shares of Canada's oldest brewer have lost momentum and on Monday fell 40 Canadian cents, or 1 percent, at C$33.60 on the Toronto Stock Exchange. "I think that (Ian's counter-bid) is not very likely. I just don't think the economics would work," said Bill Chisholm, an analyst with Dundee Securities Corp. "Investors are probably recognizing that the probability of him coming out with a bid that would be successful is not high." Shares of Coors, the No. 3 U.S. beer maker, closed down $1.14, or 1.6 percent, at $68.10 on Monday in New York.


22 September, 2004