Unfair dinkum: Foster's says no to SAB Miller's A$9.5bn bid

SAB Miller vowed yesterday to keep talking to the board of Foster's after Australia's biggest brewer rejected an all-cash A$9.5bn takeover bid by the world's second-largest brewing concern, saying that it significantly undervalued the company.

The announcement of the conditional proposal by SAB Miller – whose beer brands include Peroni, Grolsch and Miller Lite – to pay A$4.90 a share sent Foster's stock soaring to a nine-month high of A$5.14. This suggests that investors expect SAB Miller to improve its offer – or other rivals to enter the fray – but Graham Mackay, the SAB chief executive, remained tight-lipped on this subject last night. He said: "This is a proposal to Foster's board, weexpect to engage. This is not a hostile offer and we have given no indication we would move that way."

Foster's has 50 per cent of the Australian beer market, a national distribution network and seven of the top 10 brands in the country. Those that account for most of the company's $2.4bn annual revenues include Victoria Bitter, Cascade, Crown Lager, Pure Blonde and Carlton Draught. Foster's lager is almost non-existent as a brand in Australia, unlike in the UK, where it is licensed by Heineken.

SAB Miller, which is listed on the London and Johannesburg stock exchanges, sent its takeover proposal to the chairman of Foster's on Monday, but the Australian company was quick to shoot it down. "The board of Foster's believes the proposal significantly undervalues the company in the context of a change of control and, as such, it does not intend to take any further action," the group said.

If SAB Miller were to succeed in its pursuit of Foster's, it would be the industry's largest acquisition since InBev bought Anheuser-Busch, the maker of Budweiser, for $52bn in 2008.

SAB Miller, which was founded in South Africa in 1895 as South African Breweries, said its indicative offer was "attractive" for Foster's shareholders. The global giant pointed out that the price of A$4.90 it had offered represented a "significant premium" of 14.5 per cent to the share price of A$4.28 on 2 June, the closing price before the most recent round of speculation about a bid for Foster's.

Eddy Hargreaves, a brewing analyst at the stockbroker Collins Stewart, said the offer looked fair. "Our thesis on SAB Miller has been that Foster's at the right price is a good deal and this is broadly at a reasonable price," he said. In addition to the attraction of Australia's growing population, SAB Miller is also keen on Foster's because the country's economy is forecast to grow at 3.3 per cent over the next five years. The global brewer said Foster's was also "well postioned to benefit" from Asia's continued economic growth.

The Australian beer market is effectively a duopoly with the Japanese brewer Kirin, controlling 37 per cent of the sector after its acquisition of Lion Nathan in 2009.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Content Writer - Global Financial Services

£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Web Developer - PHP

£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Field Sales Consultant - Financial Services - OTE £65,000

£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Loan Underwriter

£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...

Day In a Page

A nap a day could save your life - and here's why

A nap a day could save your life

A midday nap is 'associated with reduced blood pressure'
If men are so obsessed by sex, why do they clam up when confronted with the grisly realities?

If men are so obsessed by sex...

...why do they clam up when confronted with the grisly realities?
The comedy titans of Avalon on their attempt to save BBC3

Jon Thoday and Richard Allen-Turner

The comedy titans of Avalon on their attempt to save BBC3
The bathing machine is back... but with a difference

Rolling in the deep

The bathing machine is back but with a difference
Part-privatised tests, new age limits, driverless cars: Tories plot motoring revolution

Conservatives plot a motoring revolution

Draft report reveals biggest reform to regulations since driving test introduced in 1935
The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

'A subversive brothel keeper and Communist'

Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

BBC heads to the Californian coast

The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

Victorian fraudster who shook the Bank of England

Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

Car hacking scandal

Security designed to stop thieves hot-wiring almost every modern motor has been cracked
10 best placemats

Take your seat: 10 best placemats

Protect your table and dine in style with a bold new accessory