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SABMiller sticks to its guns on Foster's

Aug 21 2011 14:34 James-Brent Styan

Company Data

Sabmiller Plc [JSE : SAB]

Last traded R312.73
Change R-1.18
% Change -0.38%
Cumulative volume 1.81m
Market cap R520.50bn

Last Updated: 25/05/2012 at 19:32. Prices are delayed by 15 minutes. Source: McGregor BFA

 

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Johannesburg - There is little chance that the world's second-biggest brewer, SABMiller [JSE:SAB], will further increase its offer of A$4.90 per share for Australian beer group Foster's. 

Last week SABMiller made Foster's shareholders a cash offer of $10bn. The Foster's board rejected it, the second bid that SABMiller had made for the company.

Rob Forsyth, head of industrials at Investec Asset Management, said Foster's was not a critical acquisition for SABMiller.

"From a financial point of view the takeover makes a lot of sense for SABMiller. From a strategic point of view it is less important."

Forsyth said that, in contrast, the offer represents a good opportunity for Foster's.

"The business has been struggling for a while and is losing market share in Australia - not only against imported beer, but also against other products such as spirits and wine.

"Some of the trends contributing to the decline in market share will make it difficult for Foster's to turn around on its own."

An expert close to SABMiller said the group also believes it can inject new life into the Foster's brand.

"It would also be a strategic move for SABMiller to move into an established market," said the expert, who did not wish to be named.

SABMiller has recently expanded rapidly thanks largely to large moves in developing markets.

This week analysts were somewhat surprised by SABMiller's offer because the Foster's full-year results will be announced only this coming Tuesday. The expectation is that these results will not be very good - which is something exerting further pressure on the Australian company's board.

Last week the board issued a statement dissuading its shareholders from even considering SABMiller's offer.

However, the third-largest shareholder in Foster's, Perpetual Investments, has welcomed the latest SABMiller approach, according to Bloomberg.

 - Sake24

To read more stories from Sake24, click here

 
 
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