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Wall Street bears batter beer stocks during 1990 3rd quarter analysis.

Wall Street bears batter beer stocks during 1990 3rd quarter analysis

The state of the world, and the state of the brewery stocks, both got a lot worse last quarter, as investors, spooked by the specter of prolonged stock market slide, bailed out of these stocks in a mass exodus.

Mix in six market minefields--Middle East tension, volatile oil prices, recessionary and inflationary fears, a growing budget deficit and most importantly poor earnings--and its fairly easy to see why beer issues drew the ire of Wall Street last quarter.

Nowhere did the damage reverberate more strongly than in the Modern Brewery Age Stock Index, which spiraled downward to the tune of 16.75 percent before cratering at 1957.20. Our index stood at 2351.05 just three short months ago.

Molson Class A & B toppled 24.6 percent and 23.2 percent, respectively last quarter. The reason: steadily weakening Canadian and U.S. economies have investors nervous that sales will soften for the brewer. The result: Molson Class A was the largest dollar and percentage-casualty in our quarterly financial barometer.

In other news, Asahi Breweries Ltd. of Japan said it will buy nearly 20 percent of Elders IXL Ltd., which in turn owns 50 percent of Molson Breweries. Terms of the deal: 446 million shares of Elders from Elders' parent, Harlin Holding Ltd. for roughly $914 million. Analysts approved of the deal from Molson's perspective because it secures a $45-million investment, or six-percent stake, it has in cash-starved Harlin. Moreover, Molson has also guaranteed $98 million in Harlin debt.

Also falling amid investor nervousness over the health of the North American economy was Labatt, which toppled 14.3 percent en route to a close of $18.75.

Coors, enjoying success with the introduction of its Keystone products last year, was the best-performing brewer in our financial measure last quarter. The brewer nonetheless, fell $2.25 a share, or 8.53 percent, before coming to rest at $24.13. The company, as expected, approved the formation of a holding company and has put the measure up for shareholder approval. The new structure will allow Coors' businesses to operate as units of the holding company with greater managerial and financial flexibility.
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Title Annotation:brewery stocks fell
Publication:Modern Brewery Age
Date:Oct 15, 1990
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