Business World

Thursday 19 October 2017

SABMiller will take its €6.9bn bid for Foster's Group directly to shareholders

TAKEOVERS

Miranda Maxwell and Sonali Paul

Global brewer SABMiller has taken its €6.9bn bid direct to Foster's Group shareholders, days before Foster's announces its annual results, having failed to win over the Australian company's board.

The cash offer at $A4.90 (€3.57) per Foster's share was similar to SABMiller's first approach back in June, though the London-based brewer said the offer would be reduced by any dividend paid by Foster's in the future, with analysts forecasting a 15 cent second-half dividend to be announced next week.

Foster's shares closed up 0.6pc at A$4.96 in Sydney yesterday, ahead of the A$4.90 bid price.

SABMiller has unsuccessfully tried to engage with Foster's over the last two months, and its preferred route is still to go for a recommended bid, analysts said.

Under Australian stock market rules, it now has two months to submit a formal bid.

Financing

Foster's rejected SABMiller's offer in June, and chief executive John Pollaers said the offer was so low it was not worth discussing. He recently came under fire from some shareholders for failing to engage with SABMiller.

SABMiller has its financing in place and is ready to go ahead with its bid and not wait for Foster's annual results next Tuesday, which are expected to show a decline in beer profits.

The cash deal values Foster's at A$9.5bn before debt, but taking debt into account the enterprise value of the bid is A$11.2bn.

A deal would join together the brewer of Miller Lite, Peroni and Grolsch with the Melbourne-based maker of Victoria Bitter, Pure Blonde and Cascade beer, and would be the biggest brewing deal since InBev paid $52bn (€36bn) to buy Anheuser-Busch to form AB InBev in 2008.

Asked if he would accept the offer, Jason Beddow, managing director of Argo Investments, which owns Foster's shares, said: "At this stage, no. There's still plenty to play out. I'm a bit surprised they went hostile before their results."

When SABMiller launched its bid for Foster's, analysts said it might have to pay up to A$5.20-A$5.40 to succeed, but now some believe A$4.90-A$5.10 will win the day.

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