Fosters Group board defends SABMiller deal at AGM

Foster's Group board defends SABMiller deal at AGM

Foster's Group has faced down criticism from small shareholders over executive pay and its deal with SABMiller at the company's annual general meeting.

Foster's CEO John Pollaers and the brewer's chairman, David Crawford, endured repeated questioning of their own abilities and the SABMiller deal price at the meeting today (25 October). "SABMiller is getting Foster's on the cheap," declared one shareholder. His call for the board to resign was greeted by applause from the floor.

There was particular unrest around Pollaers' long-term bonus plan, which was put in place after SABMiller's initial approach to the company in June. Crawford, however, said that this was done to "have management focused on the long-term" and to have a "retention arrangement for senior executives ... in the uncertainty of a possible takeover".

If the SABMiller takeover goes ahead as expected, this will have been Foster's' last AGM as an independent company. Last month, SABMiller agreed a deal that will see it pay AUD5.1 per Foster's share. Foster's Group will then use a dividend and a one-off payment to ensure that shareholders receive AUD5.5325 per share.

Prior to the deal, several Foster's shareholders were reported as urging the company to at least talk with SABMiller, fearful that the Australian brewer's price expectations were too high. Today, Pollaers and Crawford defended the price, citing global stock market uncertainty. Pollaers also reminded shareholders of the tough conditions on Australia's beer market.

"The economic environment has been one of the toughest we have seen in nearly 20 years," he said. "While there has been some improvement in recent months, consumers remain hesitant given the ongoing global economic concerns."

But, he remains confident that beer will "return to the long-term trend of moderate growth" once Australia's economy improves. Despite leaking market share in the past five years, Foster's is still the country's leading brewer, with volume share of close to 50%, ahead of Kirin-owned Lion Nathan.