A revised assessment by Southcorp's independent expert has valued the company's shares closer to the bid value offered by Foster's Group. Lonergan Edwards & Associates, which had originally valued Southcorp's shares at between A$4.57 and A$4.80 a share, has cut its valuation of Southcorp to between A$4.30 and A$4.50 a share. Foster's bid of A$4.26 a share has already been recommended by five of Southcorp's seven directors.

Lonergan pointed to a fall in global stock markets since its initial report almost two months ago. While Lonergan feels that Foster's latest bid is not fair, it said that the offer can not be dismissed. A rival bid appears increasingly unlikely, the assessor said, warning also that Southcorp's share price may fall if the bid lapses.

In a report included in Southcorp's latest statement to shareholders, Lonergan said: "We consider Foster's revised offer is reasonable.

"As a result of the significant fall in share market values generally and related change in market sentiment, we are of the view that the underlying value of Southcorp shares today would be lower than our assessed valuation range as at 7 March."

Foster's upped its bid for the wine company to A$4.26 a share on 22 April, and reduced the minimum acceptance condition to 50% from 90%. The company said yesterday that it has secured acceptances for 38.4% of the target.

"In the opinion of five out of seven of your directors, it is in the interests of Southcorp shareholders to accept Foster's offer," chairman Brian Finn said in a letter accompanying Southcorp's statement to shareholders.

"Although the Southcorp directors believe that Southcorp could continue to develop its wine business successfully, the majority of Southcorp directors recognise that there has been a period of market uncertainty that is unhelpful to Southcorp and its shareholders and, if it continues, is likely to reduce the value of Southcorp."

In a separate letter to shareholders, the two dissenting directors, chief executive John Ballard and director Ern Pope, said: "It (Foster's offer) doesn't adequately compensate Southcorp shareholders for either the long-term value of Southcorp or the substantial synergies that would be available to Foster's if its offer is successful."

At close of business yesterday, Southcorp shares were trading at A$4.24.