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Foster’s Affirms Rejection of SABMiller’s $9.6 Billion Bid as ‘Inadequate’

Foster’s Group Ltd. (FGL), Australia’s biggest brewer, affirmed its opposition to SABMiller Plc (SAB)’s hostile takeover bid after the cash offer was cut to A$9.25 billion ($9.6 billion) on dividends paid.

Investors should reject the “inadequate” offer and are advised not to take action when SABMiller files its formal bidder’s statement, Melbourne-based Foster’s said in a letter to investors filed with the Australian stock exchange today. The offer is now worth A$4.7675 a share after adjusting for the 13.25 Australian cent dividend to be paid by Foster’s, it said.

Foster’s has opposed the offer since first disclosing an approach on June 21, instead committing to Chief Executive Officer John Pollaers’ plan to return at least A$500 million to investors and cut production costs to revive earnings. London- based SABMiller, the maker of Peroni and Grolsch, announced plans to take its offer directly to shareholders on Aug. 17.

“Your board will always act in the best interests of shareholders and will therefore give due consideration to any bona fide offers it receives,” Chairman David Crawford said in the letter. “There is significant future value available to you, as a shareholder, if Foster’s remains an independent company.”

The offer by the world’s second-largest brewer by volume was originally worth A$4.90 a share, or A$9.5 billion, prior to any dividend payments.

Shares Decline
Foster’s shares fell 1.6 percent to A$4.83 at the 4:10 p.m. close of trading in Sydney.

SABMiller failed on Sept. 8 to get Australia’s Takeovers Panel to intervene in the bid after the body rejected its application to review statements from Foster’s about earnings forecasts and debt levels.

Foster’s has forecast revenue in the 12 months ending June 2012 will rise at a “mid single-digit” pace with earnings before interest and tax increasing faster.

Were the offer to succeed, SABMiller would gain just under half of the Australian beer market, including brews such as the namesake lager, Pure Blonde and Fat Yak.

Foster’s has said it’s open to talks on a “sensible” bid from SABMiller, without being more specific.

12 Sep. 2011

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