Fin24

SABMiller ups Foster's deal on tax ruling

2011-11-18 09:25

Sydney - SABMiller [JSE:SAB] will raise its takeover offer for Australia’s Foster’s Group to A$5.40 a share to make up for the loss of a 30 cents capital return after a tax ruling from Australian authorities.

To maintain the payout to shareholders, SABMiller would raise the offer by 30c/share, Foster’s said in a statement on Friday.

The two firms in September had agreed a deal at A$5.10/share, valuing Foster's at A$9.9bn.

As part of the deal, Melbourne-based Foster's will also return 30c/share as a capital return it promised in August after a tax refund and pay a final dividend of 13.25c. The total value of the deal, including debt, is A$11.5bn.

The takeover requires approval of 75% of votes at a Fosters shareholder meeting in December. The deal has wide support from institutional investors.

SABMiller expects its biggest ever takeover deal to close by the end of the year and put it at the head of the Australian beer market with a near-50% share.

The deal is part of its strategy of creating an attractive global spread of businesses to add to its operations largely in the emerging markets of Africa, Latin America, Asia and Eastern Europe, which are leading the recovery in the beer market worldwide.

The London-based brewer of Peroni, Miller Lite and Grolsch launched its initial bid for Foster’s at $9.5bn, or A$4.90/share, on June 21 and then went hostile by taking the offer direct to shareholders at the same price on August 17, but Foster’s rejected both as being too low.

Peace broke out in the acrimonious three-month bid battle after SABMiller offered to raise its cash offer.

Foster’s, the maker of Victoria Bitter, Carlton Draught and Pure Blonde, has been struggling with declining volumes as demand for traditional beers falls, and its market share has slid to 50% from 55%.

Foster’s has retreated back into Australia, giving up its global beer empire and splitting its beer and wine businesses to pave the way for a sale of the beer business that still boasts high profit margins.