By Andrew Starke
Market reaction to the SABMiller and Foster’s announcement has generally been positive with some analysts arguing the sale was inevitable.
Pessimistic industry data, market instability and an absence of counter-bidders are all factors that strengthened SABMiller’s hand.
The higher offer is in line with the multiple Kirin paid for Lion Nathan in 2009 and is also consistent with global beer industry acquisitions concluded over the past three years.
While the Australian Tax Office, Foreign Investment Review Board and Australian Competition & Consumer Commission all represent potential stumbling blocks, analysts do not foresee the deal being derailed.
“This represents a full price and is a very favourable outcome for Foster’s shareholders,” said Andy Bowley, an analyst at Citigroup, in a note to clients.
“Given the full price and lack of apparent action from other potential suitors, the probability of a counter-bid at this stage is low.”
Last month, Foster’s told shareholders to reject SABMiller’s hostile takeover bid, saying the offer was too low.
This came after Foster’s rejected an initial approach in June.
The brewer had embarked on a cost cutting regiment in an attempt to improve the bottom line, mainly through demerging its loss-making wine division.
As previously reported, SABMiller has separately reached agreement with Coca-Cola Amatil (CCA) to acquire its share of their Pacific Beverages joint venture should SABMiller acquire a controlling interest in Foster’s.
Director of CCA’s media and public affairs, Sally Loane, referred TheShout back to its amended joint venture terms issued in June.
“Our position hasn’t changed from this,” she said. “In other words, should the SABMiller acquisition of Foster’s go ahead we believe this is a great deal for CCA.”
“It will deliver approx $305 million to CCA and we will also get the opportunity to acquire some Foster’s assets (spirits, RTDs, soft drinks and the Fiji brewery) at multiples that means they will be immediately EPS accretive to CCA.”
However, there will be a two-year non-compete period for CCA in beer in Australia.
Long time coming. It’s great that SABMiller recognise AUS as it’s own market. “You can’t market globally to the local beer consumer – there’s no such thing,’ says Graham Mackay of SABMiller. Wise words.