Molson and Coors plan beer merger

Coors, the US's third biggest brewer, is in talks to merge with Canadian rival Molson.

Such a deal could strengthen their hand in competing with the "big two" in the US brewing business, Anheuser-Busch and SABMiller.

The family-controlled firms would split the top jobs among their current board.

But some observers warned there may not be much synergy in the deal, and said the plan could smoke out another bidder for one of the two.

Both brands have fallen behind the big two in terms of the booming North American market for low-carbohydrate food and drink.

Neither has a low-carb offering, while their low-calorie "light" beers are losing out to Bud Light and Miller Lite.

Come together

The agreement comes at a time of rapid shake-up in the beer business.

"Global beer is consolidating at a fairly healthy clip," said Raymond Lai, analyst with Raymond James Ltd.

"A bigger beer company would benefit from purchasing advantage as they do much more global sourcing of their raw materials."

SABMiller is the product of a May 2002 union between South African Breweries and Miller of the US, itself designed as a counterweight to the might of Anheuser-Busch brands such as Budweiser.

Both have since hunted for further acquisitions - the most recent of which is China's Harbin, won by Anheuser-Busch in June after a bidding war.

In March, Belgian rival Interbrew leapfrogged SABMiller into the world number two spot with its takeover of AmBev of Brazil, whose 180 million people form a key target market.