SAB beverage giant has swooped on Foster’s with a $9.5 billion bid to take over the iconic Australian brewer.
Foster’s this morning said it had knocked back the takeover bid lobbed by SAB Miller, which owns the Grolsch, Miller and Peroni brands and a suite of other beers sold around the globe.
Announcing this morning that it had received the bid, Foster’s management said SAB Miller had “significantly” undervalued the Melbourne-based company.
Foster’s shares jumped 61 cents, or 13.47 per cent, to close at $5.14, the highest since February 2007.
Analysts believe SAB Miller’s offer could launch a bidding war for Foster’s, which has been the subject of fierce takeover speculation since it sold off its wine business last month.
Earlier this month, the market was awash with rumours that Mexican brewing powerhouse Grupo Modelo would be first to the bidding table.
Foster’s makes Australia’s most popular beer, Victoria Bitter, and a string of other household names including Carlton Draught and Pure Blonde.
SABMiller, the world’s second-biggest brewer by volume, made an unsolicited and conditional proposal of $4.90 a share in cash for Foster’s, an 8 per cent premium on Foster’s last trading price of $4.53.
“The board of Foster’s believes that the proposal significantly undervalues the company in the context of a change of control and, as such, it does not intend to take any further action in relation to it,” Melbourne-based Foster’s said in a statement today.
Foster’s announcement came after Coca-Cola Amatil (CCA)said it had amended the terms of its joint-venture with SABMiller that freed up the latter’s ability to bid for any Foster’s assets.
In a separate statement, CCA said the existing joint-venture arrangements would limit SABMiller’s ability to acquire Foster’s shares in its own right.
“SABMiller does not wish to make a joint bid with CCA unless it results in SABMiller having financial management and operation control of (Foster’s),” CCA said.
“CCA does not intend to make offers to acquire shares in FGL in its own right or as a passive minority shareholder.”
The two companies are 50-50 joint-venture partners in Pacific Beverages, which manufactures the Bluetongue brands and distributes products such as Peroni Nastro Azzurro, Grolsch and Pilsner in Australia and New Zealand.
CCA said, should SABMiller make an offer for Foster’s within five years and acquire at least 50.01 per cent of the brewer, or declares its offer unconditional, SABMiller would buy out CCA’s half stake in Pacific Beverages for between $305 million and $380 million.
There would also be possible additional payments, CCA said, as well as non-compete provisions restraining both companies from going head-to-head in certain product lines, for 24 months.
CCA said it would also have the right to acquire some Foster’s businesses.
“These amendments are designed to deal with the situation where SABMiller wishes to acquire FGL and we dont,” CCA chief executive Terry Davis said in the statement.
Mr Davis said the if CCA’s share of Pacific Beverages was sold under the new arrangement, the purchase price would boost earnings per share by 2 to 3 per cent.
CCA said the Pacific Beverages business was listed in its accounts with a value of $95 million.
The two companies have, by mutual consent, also locked in a 10-year deal for the manufacture, sale and distribution of Beam spirits in Australia that now sits outside the Pacific Beverages joint-venture.
Belgium-based Anheuser-Busch InBev NV is the world’s biggest brewer.