SABMiller Takes Foster’s Bid Directly To Shareholders
August 17, 2011After receiving a cold shoulder on its initial June buyout bid from the board of Australian beer market leader Foster’s, SABMiller has now put the same offer, A$4.90 ($5.17) per share, or A$9.51 billion ($10b) in total, directly to the brewer’s shareholders in a conditional, off-market, cash takeover bid. SABMiller says it now has funding in place for the offer, “through a combination of existing resources and new debt committed by a number of financial institutions.” The bid comes in below Foster’s last traded price of A$4.96 ($5.24), and analysts believe SABMiller may have to raise its offer to strike a deal, which would require 90% shareholder approval. Foster’s CEO John Pollaers recently said the group was open to reasonable offers for the business, but that SABMiller’s bid was far too low to consider.
Still, Foster’s position may be weakening. In the 12 months through June, its top brand—and the largest beer label in Australia—Victoria Bitter, saw its market share slide to 13.5% from 14.3% a year earlier, according to Nielsen, as Foster’s overall market share fell from 48.77% to 48.71% over the same period. Much hinges upon Foster’s full-year results for the year through June, expected next week. If they disappoint, SABMiller’s leverage toward a deal will mount significantly.
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