On potential SABMiller bid for Molson, that is. Speculation running near amok, with repeated references to “people familiar with the situation,” but SABMiller still not commenting. To recap: Toronto Globe & Mail, WSJ and Financial Times reported SABMiller in “early discussions” and has “had contact” with dissident shareholder/family member Ian Molson, unconfirmed by SABMiller. Milwaukee Jnl Sentinel quoted mgr of hedge fund which owns Molson shares who believes in “a much better than 50-50 chance” that SABMiller and investment firm Onex will bid. Meanwhile, analysts and observers weigh pros and cons. As Citigroup/Smith Barney put it in a report yesterday: “Should SABMiller bid for Molson…the synergies could be immense but so could the costs associated with dismantling the existing Molson-Coors interconnectedness and the premium needed to make such an acquisition in a ‘hostile’ bid situation.” Same folks expect SABMiller to announce next week that Miller’s US volume up 1.8% for 5 mos thru Aug. 

Future of independent US beer distrib “will be decided more in the marketplace than in the courtroom,” said Miller ceo/prexy in probing presentation at NBWA convention this week. (Remarks echoed comments by AB prexy August Busch IV that AB and its distribs must “work together to add value to all our retailer customers to help them meet their goals and objectives.”) Retailers’ “obsession” with return on assets, suggested Norman, means growth is “essential element” for retailer survival and brewers/distribs must ensure beer category “working best” to help ‘em improve velocity, margin, and shopper visits, and help ‘em manage complexity and build “uniqueness of the retailer’s brand.” Norman also detailed 4 “critical deliverables” for Miller and its distribs: strengthen brand pull, “capitalize on unique local strengths” while continuing to “facilitate national efficiencies” by pushing DSD advantages, and focusing on building beer category, not just taking share from competitors.

SABMiller is in talks with Ian Molson and Onex Corp

Miller and Coors “are not going to assign the same person” rights to a potential deal if both have 120 days to negotiate exclusively, said consultant Joe Thompson at NBWA seminar. That would mean “a 120-day stall period” and “impasse” in negotiations, during which sales trends “will change” and other factors could muck up deal. “Anyone who signs" amendment, added Joe, is “walking right into the middle of crossfire…. Some judge is going to have to figure it out.” Atty Phil Morgeson, (son of former NBWA chairman Jay Morgeson) told Joe’s seminar that Miller gave distribs only until Oct 1 to sign and yet its own agreement sez distribs have 90 days from when it proposes an amendment. Then Miller can terminate. But Miller has “disparity in bargaining position” which is a no-no in a bilateral agreement, sez Phil. State assn could get “declaratory judgment” saying that Miller’s whole amendment process not fair or legal. "Don't sign this," he concluded.  

Top Miller execs seemed truly surprised at snowballing resistance to amendment. Put out statement after NBWA mtg that based on “feedback … it is clear we did not thoroughly communicate our intentions behind the changes contained” in amendment. “We respect the fact that distributors need to review and clearly understand any such changes.” Miller’s intent, wrote sr vp/general counsel Mike Jones: “Simply provide a more level playing field relative to other suppliers. In essence, this amendment would provide Miller with 120 days notice when a distributor intends to sell its Miller business. We are not trying to exercise any control over another supplier’s brands. And we don’t think another supplier should have any control over our brands' destiny either.” Miller talkin’ to Coors to “iron out apparent inconsistencies” and will be talkin’ to distribs about “movement toward clear resolution” in “coming days.”

Miller-Coors distribs who sign amendment are “between a rock and a hard place if [they] have an intent to sell,” atty Mike Madigan, long-time advisor to Minn distribs, said at NBWA seminar. “Who are you supposed to negotiate with, Miller or Coors? …. I’m going to be advising my Miller wholesalers … and I know many, many other states are going to be advising their wholesalers … not to sign this agreement until we can sort out these conflicts.” Pointed to similar situation when AB put “primary efforts” into its contract. Miller sent letter to AB-Miller distribs that if they signed, they risked termination. AB sued, but ultimately ironed out conflict with Miller. Similar resolution possible here, Mike thinks, with language along lines of: “In the event…that a provision in another supplier’s agreement conflicts with the language herein, wholesaler shall not be required to act in a manner inconsistent with the obligations of other agreements.”

Miller “confirmed with our legal counsel that Miller's” amendment “does not conflict with Coors' rights… regarding Coors brands,” sr veep Doug Brodman wrote distribs last Friday. Distrib's decision to sell biz may create rights for suppliers to purchase their "respective portions," wrote Doug. Miller (and Coors) simply retain rights to “negotiate exclusively” for their portions, in Miller’s view.

A very fluid Miller/Coors contract conflict was by far biggest buzz of the NBWA convention in San Diego. Miller already put out 2 statements in last week stating its position. But many Miller distribs are angry about way Miller handled this, state execs are mobilizing for an organized response, and attys are advising distribs not to sign at very least until Miller and Coors work things out. Discussions dominated industry’s largest convention, and were probably not at all what Miller or its distribs had in mind as Miller rode into town on relative high.

In NY, Rich Ippolito bought out Staten Island Clare Rose, where he’d previously been equity mgr of 1-mil case AB operation. Clare Rose remains large AB distrib on Long Island. In fact, Rich is surrounded by giants: AB’s branch in several NY boroughs, Clare Rose on the Island and Union in Brooklyn (owned by Sheehan family—one of biggest AB distribs). Across US, Gold Cities Bev Co, a small AB distrib (about 400,000 cases, including several other suppliers’ brands) in Northern Calif is about to sell to Nor Cal in West Sacramento. Also interesting because seller Mike Flanigan is member of Busch family.

New book by economics prof Douglas Whitman bein