“Merger talks between beer giants Molson Inc. and Adolph Coors Co. have gained momentum, creating the potential for a new North American brewing giant in a rapidly consolidating industry, according to people familiar with the situation,” writes Robert Frank in today’s Wall Street Journal.

“The talks are at a sensitive stage and could fall apart, the people said. Several hurdles remain for any combination of Coors and Molson, which sport similar market capitalizations of about $3 billion. The chief hurdle is a Molson feud.”

“A merger would give both companies desperately needed size. Molson, the big Canadian brewer, has struggled to expand in the U.S. and Brazil. Coors has for years remained the third-largest U.S. brewer, but hasn’t kept pace while brewing giants Anheuser-Busch Cos. and Interbrew SA roll up brands world-wide.”

“Coors and Molson have already been working together since 1998 — with Coors distributing certain Molson products in the U.S., and Molson distributing some of Coors’s brews in Canada.”

“Coors representatives didn’t return calls seeking comment. A Molson spokeswoman declined to comment on any specific talks, but noted that the two already work together and that ‘we do have conversations and we do have discussions with them. We are always assessing our strategic alternatives in an industry that’s faced with consolidation.’ “

“Although terms are still being discussed, one scenario calls for Eric Molson to be named chairman of the combined company, while Coors Chief Executive Leo Kiely could be CEO.”

“Coors has been at a crossroads, say people familiar with the matter, ever since fourth-generation chairman Peter H. Coors decided to pursue a seat in the U.S. Senate. With no clear succession plan, Mr. Coors’s political interests have essentially put a for-sale sign up for the Golden, Colo., brewer, these people add.”