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Business | Adolph Coors and Molson plan to combine two century-old, family-run breweries to create the world's fifth-largest beermaker

Issue: "Democrats are all smiles," Aug. 7, 2004

Merger brews As North American beer sales remain flat, two leading breweries are teaming up to better position themselves in the growing overseas markets. Adolph Coors Co. of Golden, Colo., and Canada's Molson Inc. announced plans to combine the two century-old, family-run breweries, creating the world's fifth-largest beermaker with annual revenue of $6 billion. While Molson is among the most popular brands in Canada, Coors ranks a distant third in the U.S. beer market behind Anheuser-Busch and SABMiller. Together, Molson and Coors would claim a 43 percent market share in Canada, 21 percent in the United Kingdom, and 11 percent in the United States and Brazil. In the past two years, both companies have acquired stakes in overseas operations. Molson acquired Kaiser in Brazil and Coors acquired the British Carling brands. Meanwhile, Anheuser-Busch, SABMiller, Canada's Interbrew SA, and other leading breweries have been stepping up their stakes in China. "We're in the midst of a whole new phase in the global beer wars," said Benj Steinman of Beer Marketer's Insights Inc. If shareholders approve the deal, Coors chief executive Leo Kiely would become CEO and Eric Molson would become chairman of the new company, which would have headquarters in Denver and Montreal. Bell wringing Once the nation's largest phone company, AT&T Corp. is struggling to survive in a market where its own former divisions are its fiercest rivals. AT&T, known as Ma Bell, said late last month that it will stop seeking new customers for its traditional consumer long-distance service after losing a regulatory battle against the regional companies created after the company's breakup by a federal judge in 1984. The company will now focus on business customers, which generate 75 percent of its revenue. The decision to drop out of the consumer chase follows a long battle with Verizon Communications Inc., BellSouth Corp., SBC Communications Inc., and Qwest Communications International Inc. over the rental fees the four Bell companies charge to access phone wires into consumers' homes. With those fees no longer regulated, AT&T won't be able to offer competitive bundles of local, long-distance, and internet service, said David W. Dorman, the company's chairman and CEO. The company has cut its work force 8 percent this year, the latest in a series of cuts that dropped employee numbers from 148,000 in 1999 to just 61,600 at the end of last year. AT&T stock, which traded above $90 a share in 2000, now sells for around $14 per share. Balance Sheet • Ford Motor Co. says it will add anti-rollover technology to its Ford Explorer, which has been the target of hundreds of lawsuits, and three other sport utility vehicles for the 2005 model year. Called roll stability control, the system automatically slows the engine and activates the brakes when a vehicle begins to tilt. • The Labor Department said 339,000 newly laid-off workers showed up at state unemployment offices for the week ending July 17, down by 11,000 from the previous week. "It is no longer a jobless economic recovery," said Sung Won Sohn, chief economist at Wells Fargo in Minneapolis. • Sales of existing homes rose 2.1 percent to a new record in June as rising mortgage rates prompted a rush by Americans to close deals before rates went even higher. The National Association of Realtors said the increase in sales pushed the annual rate of existing home sales to an all-time high of 6.95 million units. The median price also hit a record in June, rising to $191,800. • Microsoft Corp., which has more than $60 billion in cash reserves, plans to pay a one-time dividend of $3 per share, to return a substantial chunk of cash to shareholders. The dividend is expected to cost Microsoft $32 billion.

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