Molson Coors stock spikes on what looks like misplaced takeover chatter
Here's one reason why Molson Coors stock was up on Wednesday.
Cheers to a buyout of Molson Coors (TAP)... or not.
Molson Coors stock popped by 4% in early trading on Wednesday following a short story from news outfit SeekingAlpha that recapped an analyst note from Gordon Haskett.
The note looked at a recent wording change inside of the beer giant's annual report filed late in February that at first blush would look like the company was approached by a would-be suitor.
However, Don Bilson, the analyst who wrote the report, told Yahoo Finance via email that "there is nothing worth relaying here" and the note was misinterpreted.
MolsonCoors echoed that sentiment.
"We routinely review our risk factors for updating in our SEC filings. There’s nothing specific to call out other than that the risk language was prompted by the SEC’s new universal proxy rules to which every public company is subject," a MolsonCoors spokesperson told Yahoo Finance via email.
Bilson's note lays out a clear-cut analysis on why any deal for the nearly $12 billion market cap Molson Coors — even in an activist situation — would be difficult to undertake and is unlikely.
Below is Bilson's note in its entirety:
"Molson Coors (TAP) is a 'controlled' company so there are limits to how much noise an activist could create. Yes, a few TAP board seats are elected by Class B shareholders but the Coors Family and the Molson Family, through their ownership of Class A stock, select 80% of the board. This being the case, why would TAP have any reason to worry about an activist? And more importantly, why did it stick a new 'risk factor' into the 10-K it filed FEBRUARY 21 that says the following: 'Shareholder activism efforts or unsolicited offers from a third-party could cause a material disruption to our business and financial results. We may be subject to various legal and business challenges due to actions instituted by shareholder activists or unsolicited third-party offers … If shareholder activist campaigns are initiated against us, our response to such actions could be costly and time-consuming, which could divert the attention and resources of our Board of Directors, Chief Executive Officer and senior management from the pursuit of our business strategies.'
In case you’re wondering, 'Risk Factor' tweaks like this haven’t proven to be particularly strong signals in the past yet we try to flag the most interesting ones when we see them. And this one definitely qualifies as 'interesting.' In particular, TAP’s mention of 'unsolicited offers from a third-party' makes for good conversation around the keg.
To be clear, this update could be more of a nod to ESG than M&A. And nothing here confirms TAP has already received an offer or expects to receive one. But by inserting this language, we now know someone within the company has thought about this and decided it was worthwhile to draft a new risk factor.
As for who might buy TAP, there was speculation many years ago that Heineken might be interested. That was shortly after ABI and SAB merged. It has been YEARS since we have heard any more on that subject. And while we had an inkling a few years ago that someone like TPG might be interested, we don’t think an unsolicited offer from a PE firm would be made public or is likely to cause material disruption. Hence, it’s very unlikely that is at the root of this mystery. That being said, this update didn’t find its way into a filing by accident."
Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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