By Andrew Starke
SABMiller has played its opening move in what analysts believe will be a protracted bid for the Foster’s Group despite an initial offer of $9.5 billion being rejected.
While the Foster’s board rejected yesterday’s approach from the world’s second largest brewer, SABMiller has upped the ante by criticizing the local brewer’s underperformance and loss of market share.
In a statement, Foster’s announced that it had received an unsolicited, incomplete, non-binding and conditional proposal from SABMiller to acquire all of the shares in Foster's via a scheme of arrangement at a price of $4.90 per share in cash.
”The Board of Foster's believes that the proposal significantly undervalues the company in the context of a change of control and, as such, it does not intend to take any further action in relation to it,” said the Foster’s statement.
Confirming the approach, a spokesperson for SABMiller said the proposal to acquire Foster's was in line with the brewer’s strategy to create an attractive global spread of businesses, with a focus on developing strong and successful brand portfolios.
SABMiller has long considered Foster's an acquisition target and has been working on its bid for some time.
”Australia has a profitable beer market in which Foster's is the leading brewer with seven of the top 10 beer brands, a national distribution platform and scale production,” said the company in a statement.
However, in a conference call with local media, SABMiller CEO Graham Mackay gave Foster’s shareholders something to think about, asserting that the company had lost focus and allowed key brands to suffer.
”For some time the company has lost market share and has been under-performing,” he said.
“We believe that this creates opportunities for us to apply our operational and commercial capabilities to enhance current performance and to use our global scale.”
Mackay said he would now seek clarity form the Foster’s board as to the reasons behind the initial rejection.
"We continue to believe that the proposal price is attractive and offers good value to Foster's shareholders,” he said.
”SABMiller can conclude a transaction quickly and will continue to seek engagement with the Board of Foster's to put an agreed proposal to Foster's shareholders.”