Fosters will lodge the orders of the Supreme Court with the Australian Securities and Investments Commission on Monday for the demerger to complete

Foster's will lodge the orders of the Supreme Court with the Australian Securities and Investments Commission on Monday for the demerger to complete

Foster's Group has finally pushed through the demerger of its beer and wine divisions, but the takeover offers have yet to come flying in.

Breaking news: Treasury Wine Estates and Foster's have traded separately for two entire days and neither company has been acquired. After all the huffing and puffing about suitors jostling for position at Foster's front door, is this week's demerger in danger of becoming an anticlimax?

Was it all a phoney war? Did Foster's imagine the US$2.5bn anonymous bid for its wine business last year?

Yesterday (10 May), Foster's officially split the firm's Australian beer business, Carlton & United Breweries (CUB), from its global wine arm, Treasury Wine Estates (TWE). The separation of Foster's wine and beer divisions dates back to February 2009, when the firm announced a strategic review of its wine business. The plan included disposing of more than 30 "non-core" vineyards, as well as 37 brands.

However, an official demerger of the two arms was only announced in May last year. The move and timeframe for completion has led to intense speculation that multinational firms might chase both CUB and TWE. In beer circles, particularly, TWE has been regarded as an unwanted child, a defacto poison pill blocking an advance on the main prize.

Interestingly, a bid for TWE came first. In September last year, Foster's rejected a AUD2.7bn (US$2.5bn) takeover bid for TWE from an unnamed private equity group, thought to be Cerberus Capital. Meanwhile, SABMiller has been considered a frontrunner for CUB, but other brewers cited include Tsingtao, AsahiMolson Coors and even Heineken.

Foster's has made clear that it will listen to takeover offers and its own adviser, Grant Samuel, has said that offers are likely. However, more and more analysts are saying that suitors may adopt a wait-and-see approach to the demerged businesses. 

Goldman Sachs analyst Ian Abbott told The Australian last week that Foster's had possibly been the subject of "the most takeover speculation of an ASX-listed stock in the past three to five years".

He said that he remains confident a deal could happen, but believes a number of hurdles remain, including "the strong Australian dollar making a bid more expensive for foreign players, the lack of global beer brands in Foster's portfolio and the few synergies acquirers would receive from Foster's isolated geographies".

The Sydney Morning Herald's Elizabeth Knight, said of the new-look Foster's/CUB business: "Given much of the takeover premium is already priced into the stock, a suitor would have to spend up to win control."

After day one of trading, TWE was valued by the Australian Stock Market at AUD2.1bn, with the core Foster's business valued at AUD8.9bn. TWE's valuation is below the takeover offer that Foster's received for the wine arm last year.

For now, both TWE and CUB have important challenges ahead. For CUB, its challenge is reversing several years of market share erosion in an Australian beer market that is currently struggling for momentum.

For TWE, the job is broader and involves restoring consumer demand for Australian wine, as well as finding a way to improve profitability in the wine sector in general.

The two businesses remain exposed to takeovers, but suitors may be holding fire until the dust settles.

NB: TWE is trading on a deferred settlement basis until 24 May.