Comment - SABMiller and Foster's Group: Hmmm...

I'm not going to be smug about today's news – I'm genuinely surprised by SABMiller's move for Foster's Group.

The scene has been set for quite a while now, for SAB to make an M&A splash: the brewer has had plenty of cash in its warchest, dating back to when Heineken snapped up FEMSA Cerveza from under its nose at the beginning of last year. Concurrently, speculation within brewing circles has been that SAB's CEO, Graham Mackay, is keen to herald his retirement with a headline acquisition, and then head off into the sunset.

But, Foster's? Really?

The Australian brewer has been the centre of M&A talk for quite some time now, primarily, as Mackay himself has admitted, because it has “an open shareholder register”.

Granted, Australia's beer market is highly profitable, and Foster's can boast healthy profit margins. At the same time, the country's economy as a whole has weathered the storm that has hit the rest of the developed world.

But, to me, it appears that it is these two reasons alone that are motivating SAB to make a move for Foster's.

Are these reasons good enough?

A year ago, we reported that Foster's was losing market share in its home market. In the three months to the end of April 2010, the company's leading Victoria Bitter brand fell to 15% of the market by value, from 17% a year earlier. Overall beer sales by volume were down by 3%, as Foster's total share of the beer market was 50%, down from 55% in 2005.

However one looks at it, Australia is a mature beer market. The move to snap up Foster's isn't the splash that I – or many other observers – would expect from SAB right now, with its strong focus on emerging market growth.

Dare I say it, but could SAB's main motivation for owning the Australian brewer be: 'Because it's there'?