At least four class-action lawsuits have been filed against Molson Coors Brewing Co., accusing management of knowing about potential financial problems before the February 9 merger of Molson Inc. and Adolph Coors Co.
Adolph Coors became the parent of the merged company and adopted its current name. On April 28, one day after the Golden, Colorado-based brewer reported disappointing financial results, the newly formed company’s share price plunged more than 19 percent.
In a press release, law firm Schatz & Nobel accused the company of violating federal securities laws by making materially false or misleading public statements. According to the release, the law firm alleged that “Coors failed to disclose that it was not operating according to plan in the first quarter of 2005 in order to safeguard its planned merger with Molson.”
In a similar suit, Milberg Weiss Bershad & Schulman alleged that the Coors and Molson companies concealed that they were not operating according to plan 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.”
Milberg Weiss also noted that on the day of the 19 percent price drop, Daniel O’Neill received a $4.8 million severance when he resigned as chairman of the company’s Office of Synergies and Integration. At the time, he stated his belief that he was leaving the company “in good hands with a bright future,” and chief executive officer Leo Kiely praised him for doing an “outstanding” job, according to a Canadian Press report.
Both lawsuits, as well as at least two others, were filed in U.S. District Court for the District of Delaware.