Chinese conglomerate eyes Rosemount, report

Chinese conglomerate eyes Rosemount, report

Foster's Group has refused to close off any avenues for the future of its troubled wine arm, amid reports that China's Bright Food is keen to buy the Rosemount brand.

Bright Food's vice president, Ge Junjie, has been pushing Foster's to break up its wine business during a visit to Australia, the Australian newspaper reported last weekend.

Foster's intends to demerge its wine and beer businesses next year and Bright Food is reportedly eyeing a bid for the firm's Hunter Valley wine operations in New South Wales, which include the Rosemount brand.

A Foster's spokesperson told just-drinks yesterday (1 July) that the company is keeping an open mind on future plans for the separated wine and beer arms.

"We are currently working through all these issues around our intent to demerge beer and wine - including due diligence, financing, tax etc," said the spokesperson.

"As always, the board will consider all options to maximise shareholder value," he added.   

Foster's does not plan to complete the demerger until 2011 at the earliest, but speculation has been swirling for several weeks on possible takeover bids, particularly for the beer division but also for wine.

Bright Food is known to be looking at Australian wine assets, however VP Junjie was quoted earlier this month as denying any interest in Foster's.

This could change if Foster's decides to break up the wine division, offering companies the chance to cherry-pick top brands such as Rosemount, Beringer and Wolf Blass.

Bright Food is already on the brink of cherry-picking Australian firm CSR's sugar and renewable energy business and the Chinese food conglomerate last week signed an agreement with the Government of New South Wales (NSW) to invest in the region's agriculture sector. 

"The Memorandum of Understanding will explore opportunities for the Bright Group to invest in the sugar, dairy and wine industries and also support NSW’s business development in China,” said Eric Roozendaal, NSW's treasurer and minister for state development.

China is NSW's largest business partner, with bilateral trade of almost AUD20.5bn (US$17.3bn) in 2008-09, while China is also a strongly emerging market for wine.

Analysts have valued the total Foster's wine business at somewhere between AUD1.5bn and AUD4bn.

Foster's approached a number of major drinks multinationals in an attempt to gauge interest in the wine arm back in 2008, drinks industry sources told just-drinks at the time. However, the group concluded early in 2009 that the time was not right to sell up.

It remains to be seen whether the group's restructure of wine operations will make the division a more attractive takeover target.

Foster's said earlier this month that it would retain three vineyards previously earmarked for sale as part of a plan to offload 5,000 hectares of vines in order to make the wine business more profitable.

The firm told just-drinks it had sold 23 properties in Australia and the US and was seeking buyers for a further 10 properties.

For in-depth coverage of the Foster's demerger, click here.