AUS: Foster's Group shares sink

A slide in Foster's Group's share price may present an opportunity for SABMiller in its attempt to acquire the Australian brewer.

Foster's has seen its share price fall below SABMiller's bid price for the first time since the takeover offer became public, in late June. A broader slide on the Australian Stock Exchange took Foster's down to AUD4.66 (US$7.65) per share by the end of trading on Monday (8 August).

The fall may have more to do with jittery investors on stock markets worldwide, but it could, nevertheless, increase the pressure on Foster's CEO John Pollaers to engage with SABMiller.

The Victoria Bitter brewer had been hovering above AUD5 following news of SABMiller's AUD4.9 cash offer. But, last week, between the close of trading on Thursday and the start of business on Friday (5 August), Foster's sank from AUD4.99 to AUD4.85. 

SABMiller and Foster's have reached an impasse over the takeover offer, with each content to let the other make the next move. At the end of last month, Pollaers was quoted as saying that Foster's could be tempted by the right offer, but that SABMiller's AUD9.5bn bid was too low to trigger talks.

Commenting on SABMiller's position, Morningstar analyst Phil Gorham told just-drinks today: "I bet they are licking their lips at the opportunity the stock price is providing." 

However, he added that, if Foster's remains low, it could provide more competition for SABMiller. "The lower share price could all of a sudden make Foster’s look interesting to a player like Asahi, who weren’t interested at higher prices, or even A-B InBev, as the risk/return profile of a deal is looking better by the day," he said. 

Last week, Nielsen data showed that Foster's beer market share in Australia fell from 49.1% at the end of March to 48.7% at the end of June, on a moving annual total basis.

Foster's will report its full-year results on 23 August.

This story was updated at 19:30 BST on 08/08/2011 to include comments from Morningstar analyst Phil Gorham.