Foster's rejects SABMiller's $10-bn bid

The world's second-largest wine maker by sales and Australia's largest brewer, Foster's Group, today rejected an $10 billion (A$9.5 billion) unsolicited takeover bid by global brewing and bottling giant SABMiller as too low.

The board of Foster's said that it believes that the unsolicited, incomplete, non-binding and conditional A$4.90 per share in cash proposal from SABMiller significantly undervalues the company.

The offer of A$4.90 per share represents a 8.2-per cent premium over Foster's closing price of A$4.53 last evening.

London Stock Exchange-listed SABMiller, which is of South African origin, said, "SABMiller believes its proposal, which represents an enterprise value for Foster's of A$11.2 billion3 and a F11 forecast EV/EBITDA4 multiple of 12.5 times, is attractive to Foster's shareholders."

It said in a statement that the price represented a significant premium of 14.5 per cent to the trading price of Foster's of A$4.28 as on 2 June 2011 (being the closing price prior to the most recent round of speculation of a bid for the company) and with a significant premium of 18.4 per cent to the adjusted closing price of Foster's shares as as on 25 May 2010 of A$4.14 (being the adjusted last closing price prior to the announcement of Foster's intention to evaluate a demerger).

It also said that its rationale in proposing to acquire Foster's is in line with its own strategy to create an attractive global spread of businesses, with a focus on developing strong and successful brand portfolios.