Moody’s could drop Molson Coors

Moody's Investors Service said it placed the Baa2/ Prime-2 ratings of Molson Coors Brewing Co. and its rated subsidiaries on review for downgrade.

The action follows the announcement that Molson Coors has reached a definitive agreement to acquire from SABMiller the 58% of the MilllerCoors Joint Venture that it does not already own for about $12 billion.

The transaction is subject to a successful closing of a deal between Anheuser-Busch InBev and SABMiller.

Financial policy, including management's commitment to investment grade and plans to de-lever will be important factors in the rating outcome.

"Assuming that MolsonCoors will issue new equity of at least 20-25% of the transaction value as it anticipates, we would not expect more than a one notch downgrade to Baa3," Moody’s senior vice president Linda Montag said in a news release.

Under the agreement, Molson Coors will also acquire full ownership of the Miller brand portfolio outside of the U.S. and retain the rights to all of the brands currently in the MillerCoors portfolio for the U.S. market. These include Redd's and import brands such as Peroni and Pilsner Urquell.

The transaction is expected to close in the second half of 2016.

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