Brewer SABMiller to buy Foster's for £6.5bn

The beer giant SABMiller has vowed to "rejuvenate" Foster's after the Australian brewer's board finally agreed to back an increased A$9.9bn (£6.5bn) takeover offer yesterday.

Graham Mackay, chief executive of the Peroni and Miller Lite brewer SAB, said the deal, at A$5.10 a share, was "attractive" for its shareholders. He cited the robust performance of Australia's economy during the global downturn, the stable and profitable beer market in the country, as well as the opportunity to deliver cost savings and improve Foster's financials.

He said: "We believe we can rejuvenate the brand portfolio and we think we can make a major contribution to rejuvenate the beer category as a whole [in the Australian market]."

SABMiller, which is listed on the London and Johannesburg stock exchanges, made an informal approach at A$4.90 a share to acquire Foster's on 21 June, which was swiftly rejected by the Australian company. This convinced SAB to go hostile on 17 August. But SABMiller won over its target yesterday after lifting its bid 2.8 per cent to A$11.5bn, including debt.

Mr Mackay said: "We said it would be attractive at the right price and this is the right price." Foster's shareholders will also receive an A$0.30 return of capital and a 13.25 cent final dividend.

Foster's board has unanimously recommended that its shareholders support the bid, which is expected to be completed before the end of December.

But Mr Mackay said there will "certainly be synergies", which are likely to result in job losses in Australia. At least one of the factories that SABMiller will own in Australia could also close. Mr Mackay declined to comment on any closures but said we will "reassign production".

SABMiller has separately agreed with Coca-Cola Amatil to acquire its Pacific Beverages brewing joint venture in Australia, which accounts for one of the factories.

Foster's has a 50 per cent share of the Australian beer market. Its brands, including Victoria Bitter, Carlton Draught and Pure Blonde, deliver annual revenues of A$2.4bn.