Bidders circling Fosters Group as wine offer turned down

Bidders circling Foster's Group as wine offer turned down

Foster's Group has rejected a AUD2.7bn (US$2.5bn) takeover bid for its global wine business, Treasury Wine Estates, from an unnamed private equity group.

Foster's said today (8 September) that it has turned down a non-binding, cash offer of between AUD2.3bn and AUD2.7bn for all of its wine assets. Foster's did not name the international private equity bidder.

The move is believed to be the first official approach for Foster's as the Australian firm prepares to demerge its wine and beer businesses. The firm has signalled previously that it would be open to takeover offers for either division and the latest development gives some guidance on what the group is prepared to accept.

"After considering the value range in the proposal, the board of Foster’s continues to consider that a separation of the wine business from the beer business through a demerger is most likely to represent the best outcome for all Foster’s shareholders," said Foster's.

"In addition, the high level of conditionality, the requirement for exclusivity and other terms of the proposal are considered to reduce the value and certainty of the proposal," it said of the bid.

The Wolf Blass and Rosemount wine producer added: "Foster’s remains committed to the evaluation of issues, costs and benefits of a potential demerger, with work continuing to progress to schedule. However, the board will continue to consider any proposal that is in the best interests of shareholders."

Speculation has swirled as to the future of the Foster's businesses. China's Bright Food has been named as a potential bidder for the wine arm, which analysts have valued at somewhere between AUD1.5bn and AUD4bn.

SABMiller, Molson Coors and Japanese brewers Asahi and Suntory are all considered possible suitors for the beer business, Carlton & United Breweries.

Foster's said last month that an AUD1.27bn impairment charge on the value of its wine assets caused the group to sink to losses of AUD464.4m for the 12 months to the end of June.