Defending Against SABMiller, Foster’s To Return Funds To Shareholders
August 23, 2011In what appears to be an effort to thwart a hostile takeover bid by SABMiller, leading Australian brewer Foster’s says it will channel at least A$500 million ($523m) in cash to shareholders, potentially in the form of a share buyback or a reduction of share volume. Last week SABMiller, the world’s second-largest brewer, bypassed Foster’s board and directly approached its shareholders with a A$9.51 billion ($10b) cash bid, or A$4.90 ($5.17) per share. (To complete the deal, SABMiller is required to obtain 90% shareholder approval.) Foster’s CEO John Pollaers has urged shareholders to ignore the offer, claiming that SABMiller (SABM) “significantly undervalues” the company. The same bid was originally rejected by Foster’s board two months ago. It falls a bit short of Foster’s most recently traded price, which rose 2% today to A$4.99 ($5.22). Analysts believe SABM will need to raise its price to at least around that level to prevail in its takeover play.
Meanwhile, Foster’s released its results for the full-year ended June 30, including a net loss of A$89 million ($93m), an improvement on a A$464.1 million ($485.4m) loss last year. Foster’s said this year’s loss was largely the result of A$1.2 billion ($1.25b) in costs related to the spinoff of its wine unit in May. Net sales dropped 5% to A$2.27 billion ($2.37b), while volumes fell 5.2% to 107.9 million cases during the fiscal year. Still, Foster’s said it managed to stabilize its Australian beer market share (which has slid to around 50%), thanks to notable performances from Carlton Draught, Carlton Dry and its cider portfolio, including Bulmers.
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