AUS: Foster's Group rejects SABMiller bid

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Foster's Group has rejected a takeover bid from SABMiller valuing it at AUD11.2bn (US$11.8bn) including debt, marking the first public approach for the Australian beer group.

Foster's said today (21 June) that it has rebuffed SABMiller's conditional, non-binding takeover bid, which values the newly-demerged Australian beer group at AUD4.9 per share in cash. The total offer value is AUD11.2bn including around AUD1.8bn of Foster's debt.

"The board of Foster's believes that the proposal significantly undervalues the company in the context of a change of control and, as such, it does not intend to take any further action in relation to it," said Foster's.

Still, it is the first time that anyone has gone public with an offer for Foster's, which demerged its beer and wine businesses last month and is Australia's largest brewer thanks to its Carlton & United Breweries business.

SABMiller's bid could flush out other potential bidders by forcing them to make a move.

The CEO of SABMiller, Graham Mackay, said today: "We continue to believe that the proposal price is attractive and offers good value to Foster’s shareholders. SABMiller can conclude a transaction quickly and will continue to seek engagement with the Board of Foster’s to put an agreed proposal to Foster’s shareholders.”

SABMiller's AUD11.2bn bid was sent to Foster's yesterday, it said. The offer values Foster's at 12.5 times forecast EBITDA, which is considered by many analysts to be the going rate for brewing industry acquisitions.

The UK-listed group added that its offer represents an 14.5% premium on Fosters' closing price on 2 June. It would finance the deal using existing resources and debt.

The Peroni Nastro Azzurro brewer already operates a beer joint-venture in Australia with Coca-Cola Amatil. However, SABMiller said that plans are in place for it to acquire this venture outright, should it succeed in agreeing a deal with Foster's.

Foster's' share price leapt by 13% on the news, to AUD5.14 per share. SABMiller's share price, however, fell by 2% in early trading on the London Stock Exchange.

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