3rd UPDATE: SABMiller Pursuing Foster's After $10 Billion Bid Rejected
21 6월 2011 - 3:53PM
Dow Jones News
SABMiller PLC (SBMRY) said Tuesday it will continue to pursue a
takeover of Foster's Group Ltd. (FGL.AU) after the Australian beer
maker rejected a 9.51 billion Australian dollar (US$9.98 billion)
offer from the global brewing giant.
SABMiller's bid for Foster's is the first big deal for the
brewing industry since Heineken (HEIA.AE) bought Mexican brewer
FEMSA early last year and follows a trend of global consolidation
in the beer business.
SABMiller --the second-biggest brewer by volume after
Anheuser-Busch InBev NV (ABI.BT)-- sees Australia's economy as
continuing to benefit from booming growth in Asia and said Foster's
is an attractive asset with seven of the country's top 10 beer
brands.
The A$4.90-a-share bid sent Foster's shares up 13.5% to A$5.14
on a major spike in volume, indicating the market is optimistic
that a higher offer will emerge.
"SABMiller can conclude a transaction quickly and will continue
to seek engagement with the board of Foster's to put an agreed
proposal to Foster's shareholders," said SABMiller Chief Executive
Graham Mackay in a statement.
Melbourne-based Foster's said the bid --an 8.2% premium to
Monday's closing share price-- "significantly undervalues the
company", adding that it doesn't intend to take any further action
in relation to the offer.
The attempt by SABMiller to buy one of Australia's most famous
brands --once marketed with the slogan "Foster's, Australian for
beer"-- could intensify debate over the rising number of foreign
takeover bids in Australia. The Singapore Stock Exchange Ltd.'s
(S68.SG) US$8.4 billion bid to buy Australia's main stock-market
operator ASX Ltd. (ASX.AU) was blocked by Australian Treasurer
Wayne Swan in April on the grounds that Australia would lose
sovereignty over its clearing systems and the deal would compromise
Sydney's goal to become a regional financial hub.
A Treasury spokesman wouldn't comment on the SABMiller bid for
Foster's. He said the Foreign Investment Review Board reviews deals
based on the country's national interest.
The bid follows the recent demerger of Foster's wine business
into a separate listed company Treasury Wine Estates (TWE.AU). The
wine business has struggled in recent years and was seen as
discouraging approaches for Foster's before the demerger.
Foster's beer business has long been considered a potential
takeover target. Sales of beer in Australia have come under
pressure in recent years as specialist boutique and
low-carbohydrate beers have grown in popularity. In Foster's most
recent financial results, the Carlton and United Breweries beer
volumes for Australia declined 5.8%. Management said its beer
division was hurt by a "significant decline" in beer market volume
in Australia.
SABMiller said it has a "proven track record" of improving the
financial and operational performance of the businesses it
acquires.
For SABMiller, maker of Grolsch, Peroni Nastro Azzuro and Miller
Lite, the move marks a change in strategy, having pegged its growth
on emerging markets. Emerging markets contribute more than 80% of
SABMiller's profits, compared to 50% for its rivals. Meanwhile, the
mature markets in which it operates, like North America and Europe,
have been under pressure.
A deal at the current price would be the fifth largest takeover
in the brewing industry's history, according to Dealogic data.
The Australian beverages market has been consolidating in recent
years. Kirin Holdings Co. (KNBWY) acquired Foster rival Lion Nathan
Ltd. for about A$3.3 billion in 2009.
Analysts said SABMiller's bid for Foster's falls short of what
Kirin paid for Lion Nathan, on a price-to-forward earnings
multiple.
If the multiple paid by Kirin for Lion Nathan were applied to
Foster's, that would equate to a A$5.40- to A$5.50-a-share offer,
Citigroup analyst Andy Bowley said in a note.
"We expect SABMiller to return with a higher bid though question
whether it can meet our view of the board's expectations given
limited synergies, low post-deal returns, and added risk given
current Australian dollar strength," Bowley said.
Some analysts said rival bidders are likely to emerge.
Japanese brewer Asahi Breweries Ltd. (2502.TO) has been viewed
as a potential buyer of Foster's beer business, in part because of
its existing tie-up with Foster's to market Asahi's flagship beer
in Australia.
A spokesman for Asahi Breweries wouldn't comment on whether the
company is considering bidding for Foster's. The company's
president, Naoki Izumiya, has been advocating for overseas
acquisitions as a way to grow sales.
SABMiller's joint venture partner in Australia, Coca-Cola Amatil
(CCL.AU), said earlier Tuesday the pair were amending the terms of
their JV to allow SABMiller to buy shares in Foster's. The initial
arrangement surrounding the Pacific Beverages JV limited
SABMiller's ability to buy shares in Foster's in its own right.
Foster's is being advised by Goldman Sachs, Gresham and Allens
Arthur Robinson.
SABMiller is being advised by Moelis, JP Morgan and RBS.
-By Cynthia Koons and Gavin Lower, Dow Jones Newswires;
61-3-9292-2095; gavin.lower@dowjones.com
(David Rogers in Sydney and Hiroyuki Kachi in Tokyo contributed
to this article.)
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