USA: A Class Action Suit against Molson Coors Brewing Company

A purported class-action suit was filed on May 13 against Molson Coors Brewing Co. (TAP), alleging that the former Adolph Coors Co. was experiencing "material adverse changes" in its business during the period surrounding its merger closing with Molson Inc. The suit claims that the company, along with a number of affiliated executives, didn't disclose these changes to investors.

A Molson Coors representative wasn't immediately available to comment on the lawsuit.

The law firm of Milberg Weiss Bershad & Schulman LLP announced that a class action lawsuit was filed on May 13, 2005, on behalf of: (i) former shareholders of Molson Inc. ("Molson") who received shares of Molson Coors Brewing Company ("Molson Coors" or the "Company") as a result of the February 9, 2005 merger of Molson by and into the Adolph Coors Company ("Coors"); (ii) open market purchasers of the common stock of Coors from July 22, 2004 to February 9, 2005, inclusive; and (iii) open market purchasers of the common stock of the Company, following completion of the merger between Molson and Coors on or about February 9, 2005 to April 27, 2005, inclusive, and who were damaged by the decline in the Company's stock. Plaintiff is seeking remedies under the Securities Exchange Act of 1934 (the "Exchange Act").

The action is pending in the United States District Court for the District of Delaware against the Company, Peter H. Coors, W. Leo Kiely III, Charles M. Herington, Franklin W. Hobbs, Randall Oliphant, Pamela Patsley, Wayne Sanders, Albert C. Yates, Timothy V. Wolf, Peter Swinburn, David G. Barnes and Peter M.R. Kendall.

The complaint alleges that in order to get the necessary shareholder approval for the merger between Coors and Molson, defendants failed to disclose, in press releases and Proxy Statement(s), that: (i) At the time the merger closed on or about February 9, 2005, which was well into the first fiscal quarter of 2005, Coors was not operating according to plan and had experienced material adverse changes in its business; and (ii) at the time of the merger, defendants had violated the terms of the merger agreement and Proxy/Prospectus by failing to disclose that Coors's business was being, and foreseeably would continue to be, adversely impacted by conditions that were causing Coors to perform well below plan and consensus estimates. Defendants concealed these material facts because it enabled them to effectuate the merger in a manner that allowed the relatives and heirs of the Coors and Molson families to dominate the combined Company, as detailed in the complaint.

On April 28, 2005, only weeks after the merger closed, before the open of trading, defendants published a release announcing disappointing results for the Company's first quarter of 2005. Immediately following publication of this release, shares of the Company fell precipitously, almost $14.50 per share, to $63.00 per share, a decline of almost 20%, a testament to investors' surprise and disappointment in the results. The same day, defendant O'Neill resigned from his post as Chair of Office of Synergies and Integration, taking with him $4.8 million as a severance payment.

Milberg Weiss Bershad & Schulman LLP is a firm with over 100 lawyers with offices in New York City, Los Angeles, Boca Raton, Delaware, Seattle and Washington, D.C. and is active in major litigations pending in federal and state courts throughout the United States. Milberg Weiss has taken a leading role in many important actions on behalf of defrauded investors, consumers, and others for nearly 40 years. Please contact the Milberg Weiss website for more information about the firm.

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