By Andrew Starke

The Foster’s Group has surprised the market by announcing that it would be demerging its beer and wine businesses, potentially clearing the way for one or both of these divisions to be sold.

However Foster’s CEO, Ian Johnston, denied that the decision had been taken to attract a buyer.

“It is important to note that this is not about selling the business,” he told a media briefing this afternoon (May 26). “This is about establishing two freestanding companies with each having their own listing on the stock exchange.”

Johnston said the timing of the demerge had not been triggered by any particular event and was a natural progression from last year’s Wine Review, which concluded that the company’s Australian multi-beverage business strategy be terminated.

The beer and wine business was created following the $3.7 billion acquisition of Southcorp in mid-2005.

Johnston said the group’s wine business was still a challenge but he could see ‘signs of improvement’ as the oversupply issue was addressed.

No decision has yet been made as to the structure of the divided entity although the newly-appointed John Pollaers would likely remain in charge of the beer business with David Dearie remaining head of the wine operation.

The demerger is unlikely to be implemented until the first half of 2011 at the earliest.

Shares in Fosters surged on the back of the announcement and were trading at $5.50 at 3pm today, up from $5.21 a week ago.


The Shout Team

The leading online news service for Australia's beer, wine, spirits and hospitality industries.

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