Australian brewer Foster's backs $10.1 billion takover offer from SABMiller
9/21/2011LONDON — SABMiller said Wednesday it has managed to win the support of the board of Foster's Group for its takeover of the Australian brewer after increasing its offer to $10.1 billion.
The deal, subject to approval by shareholders and regulators, would bring Australia's biggest brewer within the portfolio of the world's second largest brewer by volume.
London-based SABMiller said it had unanimous backing from the Foster's board for the offer of 5.10 Australian dollars ($5.23) per share. Foster's said other provisions of the deal raised the total value to 5.5325 Australian dollars per share.
The Australian company had last month rejected an offer that valued it at 4.90 Australian dollars per share.
Foster’s Chief Executive John Pollaers said the deal offers outstanding value for Foster’s shareholders, and emphasised the strength of the 150-year-old Australian beer maker having sought to turn around the business since his appointment in May.
“Today highlights once again the very bright future for Foster’s and demonstrates what a prized business this is in the global beer industry,” he said.
The former navy weapons engineer previously had defended the maker of Victoria Bitter, Carlton Bitter and Pure Blonde from the hostile SABMiller bid by returning cash to shareholders and looking to revive the brewer’s earnings.
Analysts said the deal’s value came at the higher end of recent beer transactions, but Foster’s did have one of the highest beer margins in the beer world and, as one of the few big brewers still available to buy, had scarcity value.
“I’m a bit surprised that the board has come back so quickly and approved a bid that looks to be only marginally higher,” said fund manager Theo Maas, of Arnhem Investment Management in Sydney.
SABMiller shares were down 0.3 percent at 2,213.5 pence in midday trading on the London Stock Exchange.
SABMiller's brands include Grolsch, Peroni and Miller Lite, and it already has rights to the Foster's brand in India and the United States.
Foster's, which owns seven of the top 10 beer brands in Australia, last year reported a loss of 89 million Australian dollars as beer sales fell by 6 percent.