By Andrew Starke
Emotional Foster’s shareholders ensured a lively Annual General Meeting yesterday with the brewer’s board of directors accused of acting in its own best interests and urged by some to resign.
The decision by the Foster’s board and major shareholders to accept a takeover offer from SABMiller was central to the dissatisfaction although a proposed incentive bonus for CEO John Pollaers, which was narrowly approved by a vote, also drew criticism.
While Pollaers and Foster’s Chairman David Crawford were at pains to point out that it was the very success of the company’s turnaround strategy over the past 18 months that had attracted SABMiller’s interest, some shareholders lamented the decision to sell the iconic brewer at a time when things were improving.
Crawford acknowledged the success of the strategy put in place by Pollaers and the management team over the past 18 months, saying this had realised significant benefits and put the company in a strong position to realise shareholder value.
However this was disputed by a number of vocal shareholders who said long-term investors would miss out on the short-term benefits associated with the brewer’s demerger from its wine business earlier this year.
The AGM is likely to be Foster's last as an Australian owned company.
Defending the board’s position, Crawford said Foster’s had maintained a position of strong financial health in a year of significant economic uncertainty and substantial business change.
“The company produced solid operating results, delivered excellent cash flows and shareholders received healthy dividends,” he said.
“Let me outline for you the value generated for an investor who has held Foster’s shares and Treasury Wine Estates (TWE) shares since 25 May 2010, the date the proposed demerger was announced.
“Such an investor would continue to own TWE shares, which have a current share price of $3.90, or the equivalent of $1.30 per Foster’s share.
“They would have received total dividends of 42.5 cents per Foster’s share, paid by both Foster’s and TWE, and they continue to own their shares in Foster’s which are currently trading at $5.31 per share.
“When all of these components are combined, such an investor would have realised a 37 percent return on their shareholding in Foster’s since the day before the announcement of the demerger.
“That is a remarkable achievement, particularly when it is considered that over the same period, the S&P/ASX200 Accumulation Index has increased by only six percent.”
Shareholders are expected to vote on SABMiller’s revised offer for Foster’s in December.
Foster’s shares were trading at $5.30 at midday today (October 26) after trading at this price for most of the past week.