Unfair dinkum: Foster's says no to SAB Miller's A$9.5bn bid
Wednesday 22 June 2011
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.
- 1 Oxygen-starved 'dead zones' with no marine life up to 100-miles long discovered in the Atlantic Ocean
- 2 The man who filmed the Freddie Gray video has been arrested at gunpoint
- 4 How the language you speak changes your view of the world
- 5 Tory activist asked to step down after Labour candidate Rupa Huq is 'manhandled' while questioning Boris Johnson on the campaign trail
General Election 2015: Fishing is on Nigel Farage's mind as he casts a line to the disaffected of Grimsby
The man who filmed the Freddie Gray video has been arrested at gunpoint
Indonesia executions: Death row British grandmother Lindsay Sandiford will refuse to wear a blindfold when she faces firing squad
Oxygen-starved 'dead zones' with no marine life up to 100-miles long discovered in the Atlantic Ocean
Russian warships accused of 'chasing away' Swedish vessel to prevent Baltic States from achieving energy independence
Over 50,000 families shipped out of London boroughs in the past three years due to welfare cuts and soaring rents
EU asylum policy is 'a direct threat to our civilisation', says Nigel Farage
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
General Election 2015: SNP and its activists 'openly racist' towards the English, Farage says
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
Schools forced to act as 'miniature welfare states' with teachers buying underwear and even haircuts for poor pupils
iJobs Money & Business
£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...
£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...
£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...
£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...