By Andrew Starke
Global brewer SABMiller has reached an agreement with the board of Foster’s to buy its beer business for $12.3 billion late on Wednesday (Sep 21), ending a four-month hostile takeover battle.
The deal, or what SABMiller CEO, Graham Mackay called a ‘compelling financial opportunity’, was sealed when the Anglo-South African brewer raised its offer to $5.10 per share, up from its initial bid of $4.90.
Foster’s investors will also receive a special cash payout of 30c per share as part of a previously announced capital initiative.
SABMiller’s bid values Foster's equity at approximately $9.9 billion and is expected to be concluded by the end of the year.
Foster’s Chairman, David Crawford, urged shareholders to accept the new deal after the board unanimously accepted the offer last night.
“This is a compelling proposal from SABMiller and represents the value inherent in this iconic Australian company and its brands and people,” Crawford said in a statement to the stock exchange.
Commenting on the agreement, Mackay said the brewer was pleased to have reached agreement on a recommended transaction to be put to Foster's shareholders.
“Foster's will become an important part of our business, and through the application of our commercial capabilities and global scale, we expect to build on the initiatives that Foster's management has put in place, further enhancing Foster's performance and creating value for our shareholders,” he said.
Mackay said the Foster’s acquisition would complement its portfolio and the raised offer was justified to avoid a lengthy – and potentially disruptive – hostile bid.
However, in a webcast overnight, he hinted that there was plenty of room for improvement.
“Fosters has been under-performing for a number of years due to sub-optimal brand support and inferior category management,” said Mackay.
“However we do recognise recent initiatives to reposition the business.”