SABMiller bid to acquire Foster’s

Posted by Josette Dunn on 23rd June 2011

SABMiller has confirmed that it has made a non-binding, conditional proposal to the Board of Directors of Foster’s Group Limited to acquire all of Foster’s shares for A$4.90 per fully paid share in cash.The proposal to acquire Foster’s is in line with SABMiller’s strategy to create an attractive global spread of businesses. Australia has a strong, wealthy and growing economy with consistent long term population growth, 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’s proposal represents an enterprise value for Foster’s of A$11.2 billion and a F11 forecast EV/EBITDA multiple of 12.5 times.  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 price 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.”