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Foster’s Says It Is Aware of Buyout Talk

Australian brewing giant Foster's Group Ltd. said Friday it had nothing to disclose in regard to a potential buyout of the brewer after media reports indicated bidders were beginning to circle.

Foster's shares were up 5.1% earlier in the trading session, prompting the Australian Stock Exchange to inquire about the stock's rising price. The group noted the media speculation about a potential bid but said it didn't have anything to disclose to the market.

Foster's beer business has long been considered a potential takeover target amid global consolidation in the brewing industry. The company's shares lost some momentum in late trading, and were recently up 3.5% at A$4.43 after trading as high as A$4.62.

Mexican brewer Grupo Modelo SAB de CV and North American rival Molson Coors Brewing Co. have been exploring a possible joint bid for Foster's, Bloomberg News reported Thursday, citing five people with knowledge of the situation. A takeover could face challenges if brewing giant Anheuser-Busch InBev NV, which owns 50% of Modelo, seeks to block a deal, the people told Bloomberg.

At the current share price, Foster's has a market capitalization of A$8.67 billion ($9.11 billion).

Foster's announced it would officially demerge its wine and beer assets in February, a move that was long suspected. The company's wine assets have been a drag on the bottom line in recent year. The operations have been plagued by write-downs owing to an oversupply of grapes and wines from Australia in the global marketplace, the financial crisis and a strong Australian dollar, making it difficult for Foster's to grow sales of its premium wines in key markets like the U.S.

Sales of beer in Australia have come under pressure in recent years as specialist boutique and low-carbohydrate beers have grown in popularity. In Foster's most recent financial results, the Carlton and United Breweries beer volumes for Australia declined 5.8%. Management said its beer division was hurt by a "significant decline" in beer-market volume in Australia.

Foster's beer brands include VB, Carlton Draught and low-carb beer Pure Blonde.

4 Jun. 2011

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