AUSTRALIA: Mildara Blass-Beringer to be World's No. 3 in $A2.56B deal
The acquisition, announced today, ends prolonged speculation about a major Australia-US wine companies merger and is likely to set off a series of further acquisitions and mergers as the world wine industry rationalises.
The other two Australian companies which are believed to have been involved in talks with Beringer, Southcorp Wines and BRL Hardy, were today not making any comment about the Foster's move.
"They're probably in their war bunkers working out other ways of trying to get major access to the US market," one analyst commented.
Foster's has offered $US55.75 for each Beringer share, an all time high for the stock, with 52% shareholder, Texas Pacific Group, and Beringer management, who hold about 3% of shares, having already accepted.
The offer values Beringer at $A2 billion with Foster's also taking over debt of about $A560m.
Collectively, Mildara Blass and Beringer, had combined sales of $A1.412b in 1999-2000, selling an estimated 11-12m cases.
Only LVMH and Gallo are believed to have greater revenues from wine.
Announcing the trans-Pacific acquisition, Foster's President and CEO, Ted Kunkel, said Foster's had been seeking a US acquisition for some time and had been talking to Beringer, which had been "a stand out", for about a year.
There would be "significant global cross-selling opportunities" for both companies.
Beringer, which currently exported only 4% of its production, would gain access to Mildara Blass's extensive global distribution network and Mildara Blass, which already exported 50% of its production, would gain "on-the-ground" access to the fast-growing US market where per capita consumption was only half that of Australia and one eighth that of France.
Mildara Blass MD, Terry David, told just-drinks.com that the approach of the companies would be as global producers of regional brands. A global brand was not seen as an option.
"We want to produce and market in regions that provide major economic returns," he said.
"We're not in South Africa. We're not in South America despite the quite big markets with Argentina being an enormous market."
He said this meant that the US and Canada were key targets along with Europe, especially for Mildara Blass' extensive wine club operation.
Some of the higher-spending European countries, including Switzerland, Belgium, Holland, Germany and the Scandinavian countries were also key targets.
"I think our scope is pretty significant," he said.
David also said that the 50% acquisition of French bottling operation Sobemab recently was important for supply the wine club operations in Germany and The Netherlands, but was more important for providing access to the French market.
"You don't go into France cold," he said. "Sobemab has got some sensational relations with premium Burgundy Houses and big Beaujolais producers."
The Sobemab operation would provide a platform for launching premium wines in France.
Foster's Group Ltd is expected to announce that it is lifting its offer for fellow Australian Southcorp, transforming three months of corporate hostility into a friendly takeover....
LVMH Moet Hennessy Louis Vuitton said today that it had seen organic sales growth of 11% in the first quarter of 2005. Consolidated sales were €3,082m for the period....
Shares in Southcorp and Foster's have been halted from trading, pending an announcement....
Southcorp's share price has dropped below the offer price made by Foster's for the first time today (18 April)....
Foster's Group is considering upping its bid for Southcorp prior to extending its offer once again....
In spite of trying to buy up Southcorp, Foster's could itself be a takeover target in the near future, according to press reports....
LVMH has said it is not looking to buy Mumm Champagne from Allied Domecq....
Moet Hennessy, the wines and spirits group of LVMH, is to launch 10 Cane, its premium rum brand in the US....
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