Molson-Coors Brewing

AP
Out of the Gate: Molson Coors Rises
Tuesday October 9, 10:17 am ET

Molson Coors Brewing Rises on Joint Venture With SABMiller; Shares Hit All-Time High

NEW YORK (AP) -- Shares of Molson Coors Brewing Co. hit an all-time high on Tuesday, after the company said it would combine its U.S. operations with SABMiller.

The stock rose $4.17, or 8.2 percent, to $55, after hitting $55.24 earlier in the session.

The joint venture will be called MillerCoors and will sell brands like Miller Lite and Coors Light in the U.S.

Citi analyst Bonnie Herzog said the combination was expected and is further evidence that consolidation in the sector will quicken in the near-term.

"The combination of Coors and Miller creates a more rational and stronger No. 2 player in the U.S. market, especially for the pricing environment," Herzog wrote in a client note.

However, Herzog kept her "Sell" rating on shares of Molson Coors for factors that include a worsening U.K. operating environment, given the onset of a smoking ban. Herzog also remained bearish on the company's Canadian market and pricing in the U.S.

"We remain concerned about the stickiness of pricing in the U.S. as the elasticity of beer demand is being tested with the major U.S. domestic brewers increasing pricing late last year," Herzog wrote in a client note.