By Andrew Starke
The Foster’s Group share price has rallied today (Sep 8) on the back of an audacious bid for its wine assets by a private equity firm.
The offer for Treasury Wine Estates was between $2.3billion and $2.7billion.
The brewing giant would not reveal the identity of the private equity firm but said it remained committed to a demerger that would unbundle its wine business from its beer operations.
“The Board of Directors of Foster’s Group Limited has received an unsolicited expression of interest from an international private equity firm to acquire the wine assets of Treasury Wine Estates,” said the company in a statement.
“The indicative, non-binding proposal involves a cash consideration of between $2.3billion and $2.7billion for 100% of the assets.”
Foster’s board met this morning and rejected the proposal, citing a number of concerns with the bid.
“After considering the value range in the proposal, the Board of Foster’s continues to consider that a separation of the Wine business from the Beer business through a demerger is most likely to represent the best outcome for all Foster’s shareholders,” said the statement.
“In addition, the high level of conditionality, the requirement for exclusivity and other terms of the proposal are considered to reduce the value and certainty of the proposal.”
A Foster’s spokesperson said the group remained committed to the evaluation of issues, costs and benefits of a potential demerger, with work continuing to progress to schedule.
However, it is understood that the board will continue to consider any proposal that is in the best interests of shareholders.
Analysts have valued Foster’s wine business at between $1.7 billion and $3.5 billion.
Foster’s shares climbed sharply on the news and were trading at $6.40 at 10.45am today, up from $6.07 at close of business yesterday.