Foster's accepts higher SABMiller bid

Foster's Group, whose leading lager brands include Corona and Foster's, had in August rejected a hostile bid of Aus$9.51 billion from SABMiller, which produces rival beers Grolsch and Miller Lite.

But Foster's on Wednesday said its board had accepted an improved offer of Aus$5.10 per Foster's share, while the deal will also see Foster's return some cash to its shareholders.

SABMiller said it expects the takeover to be completed before the end of 2011 after approval by Foster's shareholders.

"We are pleased that we have reached agreement on a recommended transaction to be put to Foster's shareholders," SABMiller chief executive Graham Mackay said in a statement.

"We look forward to working with Foster's employees and other stakeholders to ensure the success of Foster's in the future as the largest brewer in Australia with an outstanding portfolio of brands," Mackay added.

A takeover of Foster's had been expected since the group recently demerged operations and amid consolidation within the Australian beverage industry.

"The board believes SABMiller's revised proposal ... reflects compelling value for Foster's shareholders and delivers certain cash proceeds in an uncertain global economic environment and high equity market volatility," Foster's chairman David Crawford said in a separate release.

Foster's, which owns Australia's largest brewer Carlton and United Breweries, recently split its beer division from the underperforming wine assets which had suffered because of a grape glut and soaring local dollar.

SABMiller's pursuit of the Australian company is meanwhile in line with its own strategy of extending its global reach. Founded in South Africa in 1895, SABMiller operates in 75 countries, while it is also a major bottler of Coca-Cola.

SABMiller's share price closed down 1.62% at 2,185 pence in London on Wednesday after a brief rally immediately following the takeover announcement.

The maker of Castle lager has noted that Australia has a strong, wealthy and growing economy that is well positioned to benefit from continued economic growth in Asia, and has a profitable beer market.

Foster's has meanwhile been battling intense competition in the beer industry, affecting its flagship brands VB, Crown and Carlton Draught.

Foster's estimated that the domestic beer market shrank 7% in the second half of 2010.

But SABMiller, whose products also include Peroni Nastro Azzurro, Tyskie and Blue Moon, said in May that annual net profits for 2010-11 had jumped by a quarter to US$2.4 billion on rising sales in developing markets.

African, Asian and Latin American sales rose 20%, 16% and 7% respectively. SABMiller added that its North America sales were flat, while in Europe they fell three percent.

The world's biggest brewer is Belgium's Anheuser-Busch InBev - which makes beers including Beck's, Budweiser, Hoegarden, Leffe and Stella Artois.

Source: AFP