Philip Adkins, CEO of Tasmanian brewer J Boag & Sons, has told just-drinks.com that it is "business as usual" at the brewer since the Philippine brewing giant San Miguel made its surprise bid earlier this week.

The off-market offer, made on April 17, is for A$1.65 cash for each J Boag share, 60% above the company's April 15 closing share price of A$1.03. This will value J Boag's at A$92m.

"This is a fantastic offer and great for J Boag's," said Adkins. "San Miguel's resources will help make J Boag far more powerful and Boag's own tough and disciplined management and distribution team will strengthen San Miguel's Australian sales.

"I've been with J Boag's for nine years, staked my reputation on it,
bet everything including my savings and now we can demonstrate that we all did a great job,' he said.

The offer was particularly satisfying, he admitted, because it showed
that all shareholders could benefit, unlike the sale of 45% of New Zealand's Lion Nathan to Japan's Kirin Brewery in which small shareholders were excluded.

J Boag's will also be discussing with San Miguel the possibility of keeping its hopes alive in the bidding race for the UK's Bass Brewers. Adkins made a statement to the Australian Securities' Commission last month officially announcing J Boag's had approached Bass and acquisition talks were taking place.

J Boag's directors met immediately after the offer was made and
issued a statement soon afterwards recommending that shareholders
accept the offer in the absence of a higher one.

San Miguel's approach came "out of the blue" with no on-
going discussions beforehand, the board said.

Manila-based San Miguel said its offer was subject to several conditions including gaining at least 50.1% of shares.
It has acquired 14.9% of shares on April 17, including 5.55m shares
(10.3%) from Adkins, and 2.5m (4.6%) of shares from Rothschilds Asset Management.

San Miguel said that Adkins had indicated a present intention to sell his remaining 26.3% of shares to it. Adkins told just-drinks.com he hoped to continue to be part of J Boag's management team but that no discussions had taken place and any decision would be one for San Miguel. He might, however, consider that the time was right to look at other opportunities.

The acquisition of J Boag would add an Australian brewery to San
Miguel's five in the Philippines, four in China, including one in Hong Kong, and one each in Indonesia and Vietnam.

San Miguel said it believed that J Boag's brands had "excellent potential" to be sold through its distribution system.
Boag's attractions are understood to have included its position in the premium beer sector which is growing at about 20% a year in Australia.

However, San Miguel is believed to be looking at increasing sales of its own brands in Australia where, last year, it gained sponsorship rights of the Sydney Autumn Racing Carnival, previously sponsored by Lion Nathan.

San Miguel's Pale Pilsen is one of the world largest selling beers and
among the top three sellers in Asia. San Miguel brands command 87% of
the Philippine market.

Australia's two major brewers, Foster's and Lion Nathan appear highly
unlikely to try to top the San Miguel offer.
Foster's are considered likely to be blocked by competition laws because acquisition of J Boag would give it the only two breweries in Tasmania.

Lion Nathan considers the price being offered by San Miguel as too high.

"It's a very full price," said an LN spokesman.
"We found it extremely difficult to understand their strategy in spending A$6.5m sponsoring the Sydney Autumn Racing Carnival and we are finding it hard to understand the strategy behind the J Boag offer," he added.

"All Boags' products outside Tasmania are distributed by Foster's and we doubt that Foster's is going to help San Miguel to distribute its products."

J Boag's Launceston, Tasmania brewery, is currently producing 25m hectolitres a year but is only operating on a single shift. Sales and marketing director, Lyndon Adams, said that with a second shift and extra capital expenditure, output could broadly be doubled.
The Australian Stock Exchange has queried J Boag about its compliance
with its continuous disclosure regulations, said an ASX spokesman. Concerns have been raised by ASX that the sales by Adkins and Rothschilds to San Miguel were made just before 4pm on April 17, more than three hours before the offer was announced.

Adkins said that J Boag was preparing a response to the queries which it would answer with complete accuracy. It would participate in any ASX process to establish that it had conducted its affairs properly and openly.

Chris Snow
Elliot Lane