Fosters Rejects $10bn SABMiller Takeover Approach
SABMiller plc confirmed that the proposal to acquire Foster's is in line with the company strategy to create an attractive global spread of businesses, with a focus on developing strong and successful brand portfolios.
6/21/2011 --- Foster's Group Limited has rejected a A$9.5bn ($10 billion) takeover attempt by SABMiller the world's second-biggest brewer by volume. The company announced in a statement that “it has received an unsolicited, incomplete, non-binding and conditional proposal from SABMiller plc 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,” the statement continued.
SABMiller’s nonbinding and conditional proposal would be an 8% premium on Foster's last trading price of A$4.53. After the statement, Foster's shares jumped on the Australian market 13% to A$5.12, its highest price since February 2007. CCA shares climbed more than 1% to AU$11.46. An acquisition of Foster’s would be SABMiller’s biggest, giving the maker of Peroni and Grolsch about 50 percent of Australia’s beer market, including the top-selling Victoria Bitter.
SABMiller plc confirmed that the proposal to acquire Foster's is in line with the company strategy to create an attractive global spread of businesses, with a focus on developing strong and successful brand portfolios. Australia has a strong, wealthy and growing economy with consistent long term population growth in key demographics, and is well positioned to benefit from continued economic growth in Asia. Australia has a profitable beer market in which Foster's is the leading brewer with 7 of the top 10 beer brands, a national distribution platform and scale production.
SABMiller has a proven track record of integrating brewing companies and improving the operating and financial performance of acquired businesses. SABMiller would use its expertise, best operating practices, management experience and global scale to enhance Foster's leadership position, strengthen and develop Foster's brand portfolio and improve Foster's operations and profitability.
The SABMiller proposal was sent to the Chairman of Foster's on 20 June 2011 with the objective of reaching agreement on the implementation of a scheme of arrangement. The proposal is subject to a number of conditions including satisfactory due diligence, agreeing the terms and conditions of a scheme implementation agreement and Foster's board support.
SABMiller believes its proposal, which represents an enterprise value for Foster's of A$11.2 billion3 and a F11 forecast EV/EBITDA multiple of 12.5 times, is attractive to Foster's shareholders. The price represents a significant premium of 14.5% to the trading price of Foster's of A$4.28 as at 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% to the adjusted closing price5 of Foster's shares as at 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).
The proposal consideration is all cash, providing certain value at closing for Foster's shareholders, and would be financed from SABMiller's existing resources and new debt facilities. SABMiller is in a position to conclude an agreed transaction quickly.
As previously announced by Coca-Cola Amatil Limited to the Australian Securities Exchange, SABMiller has separately reached agreement with Coca-Cola Amatil Limited to acquire its share of the Pacific Beverages Pty Limited joint venture should SABMiller acquire a controlling interest in Foster's.
Commenting on the proposal, SABMiller Chief Executive Officer Mr. Graham Mackay said: "SABMiller has a proven track record of acquiring and integrating brewing companies in a way which benefits shareholders, employees, business partners and the broader community.
"We aim to strengthen the Foster's brand portfolio and work with the local team to bring our innovation, global scale and expertise to the business.
"We continue to believe that the proposal price is attractive and offers good value to Foster's shareholders. 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."
