The combined company would have annual revenues of about $6 billion and would rank fifth in the world by brewing volume, the companies said in a statement. Coors chief executive Leo Kiely would become CEO and Molson Chairman Eric Molson would become chairman.
The deal would merge two family breweries both founded more than a century ago. Golden-based Coors is the third-largest U.S. brewer, while Montreal-based Molson is neck-and-neck with Interbrew S.A.'s Labatt Brewing in Canada.
Analysts have been skeptical of the plan, saying they were uncertain how it would benefit the companies or save money. The U.S. market is flat and companies have begun working together to tap emerging markets overseas, particularly in China and South America.
But Coors and Molson said in Thursday's announcement that the combination should generate $175 million a year by 2007 in cost savings and new revenues.
John Molson founded the company that bears his name in 1786. Coors was established in 1873 by Adolph Coors and Jacob Schueler. The voting stock in each is still controlled by descendants of the founders, who include Peter H. Coors — the company chairman and a U.S. Senate candidate in Colorado.
In 2003, Coors reported net income of $174.6 million on sales of $4 billion. Volume was up 2.8 percent to 32.7 million barrels. By comparison, Anheuser-Busch, the nation's No. 1 beer company, earned $2.08 billion.
Montreal-based Molson reported a profit of about $181 million in 2003 on $1.91 billion in revenue.
In 2002, Molson acquired Kaiser in Brazil and Coors acquired the British Carling brands. Anheuser-Busch, SABMiller, Interbrew SA and others have been stepping up their stakes in Chinese brewers.
Besides its Golden headquarters, Coors has a second brewery in Memphis, Tenn., and a packaging facility near Elkton, Va. Molson has operations in Canada, Brazil and the United States.