Blog: Chris Brook-CarterSmoke screens

Chris Brook-Carter | 10 March 2005

Deciphering the strategic signals that boardrooms send out as they look to manoeuvre through the murky world of mergers and acquisitions is often hard enough. However, at times this week it has felt as if executives the world over united to send out one mighty smoke screen.

Within a few days, the mist surrounding the future of Latin American beer producer Bavaria has thickened and Southcorp added to the confusion its shareholders must be in by suggesting it merge with Foster’s global wine operations, while once more rejecting a full takeover.

Foster’s seems to have all but rejected this apparent peace offering by the Southcorp board, saying the proposal "grossly undervalues" its wine business. Will Southcorp be that surprised by Foster’s reaction? I wouldn’t think so. This appears to be another play by Southcorp chairman Brian Finn in a game of brinkmanship. It places the ball firmly back in Foster’s half of the court and adds the pressure on them to come up with an increased bid for all of Southcorp’s business.

Meanwhile, the mystery surrounding any potential takeover offer for Bavaria deepens. Both Scottish & Newcastle, SABMiller and Heineken have been linked to bids in the last few days, but nothing concrete has emerged and the Colombian’s share price keeps climbing.

The company is an obvious takeover target following the recent merger of Interbrew and Brazil’s AmBev. Bavaria has so far played it cool, on the one hand playing down speculation whilst on the other admitting it is in discussions – a tactic that has done its shareholders no harm at all so far.


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