Deal on ice as Macquarie backs SabMiller's $9.5bn takeover offer
Published 19/08/2011 | 05:00
AUSTRALIAN brewer Foster's Group should accept SABMiller's hostile A$9.5bn (€7.06bn) bid, broker Macquarie said yesterday, adding the London-based company was already offering too much.
SABMiller, the brewer of Miller Lite and Peroni, made an initial cash bid worth A$4.90 per Foster's share in June, then went hostile on Wednesday to take its bid directly to Foster's shareholders. Foster's has rejected both approaches.
"Based on what we know about the company, its brand and the market, we do not believe that Foster's is worth A$4.90 per share. We recommend accepting the offer," Macquarie analysts said in a research note.
There are no revenue synergies and limited cost synergies, outside of eliminating public company costs in a deal linking Foster's near-50pc share of the Australian beer market with SABMiller's share of around 1pc, the analysts said.
"Foster's already generates the highest sales per hectolitre in the listed world and has the highest margins, so there is little prospect of revenue-driven margin expansion," they said.
Taking debt into account, the enterprise value of the proposed transaction is A$11.2bn.
Foster's shares closed up 0.8pc at AU$5.00 yesterday.
SABMiller is raising a $12.5bn syndicated loan to back its hostile bid for Foster's, banking sources said yesterday.
The dollar-denominated loan is priced at around 90 basis points (bps) over LIBOR, the sources said, well under European banks' dollar funding rates, which spiked this week.
The loan includes an 18-month bridge loan to bond issues of around $8.5bn and also includes three and five-year terms and revolving facilities, one of the bankers said.
SABMiller is arranging the loan itself and has asked banks to commit $1.6bn each.
The brewer is pushing to close its jumbo loan as Europe's dollar funding crisis deepens.
It is expected to raise the full amount of the loan from banks with easy access to dollar funding -- either US banks with dollar retail deposits or Japanese banks with lower funding costs.
The decision to join the loan is a painful one for many of Europe's top arranging banks, which are paying nearly twice as much for dollars as the loan's interest margin.
The $12.5bn loan is expected to be signed on Friday, the sources said.