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Foster’s Rejects SABMiller Bid

SABMiller PLC said Tuesday it will pursue a takeover of Foster's Group Ltd. after the Australian beer maker rejected an initial 9.51 billion Australian dollar (US$9.98 billion) offer from the global brewer.

Foster's Group rejected a nearly $10 billion takeover offer from global brewing giant SABMiller
Foster's beer business has long been considered a potential takeover target amid global consolidation in the brewing industry. SABMiller's bid follows the recent demerger of Foster's wine business, which had struggled in recent years.

"SABMiller can conclude a transaction quickly and will continue to seek engagement with the board of Foster's to put an agreed proposal to Foster's shareholders," SABMiller Chief Executive Graham Mackay said in a statement.

Foster's said early Tuesday that SABMiller made an unsolicited, incomplete, nonbinding and conditional offer to acquire all Foster's shares for A$4.90 a share, an 8.2% premium to Monday's closing share price.

"The board of Foster's believes that the proposal significantly undervalues the company in the context of a change of control and, as such, it doesn't intend to take any further action in relation to it," Foster's said.

Sales of beer in Australia have come under pressure in recent years as specialist boutique and low-carbohydrate beers have grown in popularity.

Foster's last month carved out its underperforming wine assets into a separate listed company, Treasury Wine Estates. The wine assets have been plagued by writedowns, with an oversupply of grapes and wines from Australia in the global marketplace. The financial crisis and a strong Australian dollar have also made it difficult for Foster's to grow sales of its premium wines in key markets like the U.S.

SABMiller's joint venture partner in Australia, Coca-Cola Amatil, said earlier Tuesday the pair were amending the terms of their JV to allow SABMiller to buy shares in Foster's. The initial arrangement surrounding the Pacific Beverages JV limited SABMiller's ability to buy shares in Foster's in its own right.

The Australian beverages market has been consolidating in recent years. Kirin Holdings Co. acquired Foster's rival Lion Nathan Ltd. for about A$3.3 billion in 2009. Japanese beverage maker Suntory Holdings Ltd. bought nonalcoholic-drinks maker Frucor in 2008, while Asahi Breweries Ltd. paid US$744 million in 2009 for the Australian unit of Schweppes from Cadbury PLC, based on exchange rates at that time.

Foster's shares were up 12.8% at A$5.11 late Tuesday morning in Sydney.

Foster's is being advised by Goldman Sachs, Gresham and Allens Arthur Robinson.

21 Jun. 2011

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