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Canada: Caisse de depot et placement du Quebec, Canada's largest institutional investor, denounced a Molson Inc. plan on Wednesday that would allow option holders to vote on its proposed merger with Adolph Coors Co., Reuters revealed on September 22. "Preliminary analysis of the terms of the deal relating to this proposed merger revealed certain elements we find worrying," Caisse chairman and chief executive Henri Paul Rousseau wrote in a letter to Molson's chairman, Eric Molson. Rousseau said he was concerned because the Montreal-based brewer's option holders were mostly company executives or board members, and might vote with their wallet in mind instead of shareholders' interests.

The Caisse, which manages Quebec's public pension and insurance funds, was Molson's second largest institutional shareholder as of Dec 31, with 3.2 million Class A shares, or 3 percent of the total. The Caisse joins a growing number of funds that have lashed out at Molson since details of its merger plans were released last Friday. "It's about being fair to shareholders," said a spokeswoman with the Ontario Teachers' Pension Plan, which has a minority stake in Canada's oldest brewer.

Another minority stakeholder, Jarislowsky Fraser Ltd., will join Teachers in challenging Molson when the brewer takes its merger plans to the Superior Court of Quebec for approval to proceed. "We really object to allowing the votes of option holders, who are executives of Molson and who have divergent views, to dilute the votes of public shareholders," Claude Lamoureux, the Teachers' Pension Plan chief executive, said in a statement released late Tuesday. "We will ask the court for changes to this scheme to protect the interest of all nonvoting shareholders who actually own over 80 percent of the company."

The three funds also object to the "golden parachutes" that will be provided for executives, saying they are exorbitant and unnecessary because the executives will keep their jobs. "Such a dual compensation seems excessive at face value," Rousseau wrote. Teachers are asking other institutional investors to support their court action. Together, the group owned more than 25 percent of Molson's class A shares as of Dec. 31.

The Molson-Coors merger requires approval of two-thirds of both Molson's class A nonvoting and class B voting shareholders.

Molson class A shares fell 35 Canadian cents, or 1 percent, to C$32.65 on the Toronto Stock Exchange on Wednesday. Shares of Coors, the No. 3 U.S. beer maker, were down 35 cents at $67.31 in New York.


25 September, 2004