Mumbai: Leading brewer SABMiller plc today announced that it has entered into an agreement to acquire a 100-per cent interest in Foster's India for $120 million on a cash-free debt-free basis, subject to certain conditions being fulfilled. Under the terms of the agreement, SABMiller will assume ownership of all Foster''s assets in India including the Foster''s brand in the territory.
Foster's Group is a leading global drinks company, with a portfolio of wine, beer, spirits, ready-to-drinks, ciders, and non-alcohol brands. Based in Melbourne, Australia with an approximate` market capitalisation of $8 billion and annual revenues of $4 billion annually,
SABMiller plc is one of the world's largest brewers with brewing interests or distribution agreements in over 60 countries across five continents. Outside the US, SABMiller plc is also one of the largest bottlers of Coca-Cola products in the world. For the year ended 31 March 2006, the group reported $2,626 million adjusted pre-tax profit and a turnover of $15,307 million.
Foster's India currently operates one brewery based in Aurangabad in the state of Maharashtra with a licenced annual capacity of 350,000 hectolitres. The company produces, distributes and supports Foster''s Lager, Amberro Mild and Amberro Strong beer brands in the Indian market. In the year ended 30 June 2006, total beer sales were 236,000 hectolitres (2005: 209,000 hl) with Foster''s Lager representing 88 per cent of total production and sales (2005: 85 per cent).
India is the third largest market for the Foster's brand globally and it has achieved a CAGR of 13 per cent since operations commenced in 1998. It has a presence in 19 Indian states and has a substantial share of the mild beer segment in the strategic state of Maharashtra.
SABMiller India will look to extend Foster's Lager nationally through its network of 10 breweries and seek significant cost benefits from brewing and distributing the brand locally. The Aurangabad brewery will also provide additional capacity for SABMiller''s presence in Maharashtra as well as a platform for access to the Mumbai market.
SABMiller India is the subcontinent's second largest brewer. Its brand portfolio includes Royal Challenge, Haywards 5000, Castle and the recently launched Haywards Black, India''s first stout beer.
Commenting on the acquisition, André Parker, managing director of SABMiller Africa and Asia, said, "This transaction enhances our existing portfolio in India and provides us with an exciting opportunity to further increase our premium brand offering. The acquisition also supplies much needed capacity to fuel the strong growth we have experienced so far this year.
"With SABMiller's extensive footprint throughout the subcontinent, complemented by Foster''s share of Maharashtra and the important Mumbai market, India remains a principal growth market for SABMiller', he added.
Trevor O'Hoy, president and CEO, Foster''s Group, said," This is an outstanding deal for Foster's Group, struck with one of our most important long-term partners. While the Foster's brand has enjoyed great success in India, the opportunity for us to continue to grow the brand profitably from a small production and distribution base, in a challenging market structure, was limited.
"The value we have achieved through the outright sale of the Foster's brand, together with the brewery and local brands, far outweighs the potential future value of retaining Foster's and continuing to own and operate the business, or pursuing a licence agreement."