So we are going to have a hostile takeover battle from international brewer SABMiller for Foster’s Group.
SAB Miller’s offer at $4.90 a share, the same as the price in the first approach earlier this year, values the Australian company at about $US10 billion ($9.6 billion).
The news came around 3.30 pm, and the Foster’s share price closed up 3c at $4.96, a muted reaction compared with the surge in the share price after the first approach in late June.
That tells us hedge funds and other speculators think there’s no chance of a rival bidder appearing.
The shares however had been trading at $4.96 just before the SAB Miller announcement to the market.
The news saw SAB Millar shares fall 1.5% in trading in London overnight, but they recovered to end up 1%..
SAB Miller is playing hardball as well, saying that it will cut the offer price by the amount of any dividend Foster’s announced after today.
Foster’s is due to reveal its 2011 results and dividend next Tuesday, August 23.
The Foster’s board is due to meet today to discuss the hostile bid.
Next week’s results will be the first since the company spun off its wine business in May.
Foster’s had previously said the $4.90 offer was so low it was not worth discussing.
SABMiller seems to be trying to take advantage of the financial market turmoil this month to test the willingness of Foster’s shareholders to hold out for a better offer.
In a statement to the stock exchange, SABMiller said it was making a ”conditional, off-market, cash takeover offer for all” of Foster’s shares.
The brewer said it had ”no willingness” to deal directly with Foster’s board.
Foster’s brands include Foster’s Lager and Victoria Bitter, Blonde, and the distribution and import rights to Corona and would add to SABMiller’s stable of Miller Draft, Urquell, Peroni and Grolsch.
A successful takeover would leave Australia’s two big brewers in foreign hands after Japan’s Kirin moved to full ownership of Lion Nathan in 2009.
The UK-based Anglo-South African brewer said it would seek a minimum acceptance of 90% of Foster’s shareholders, and that it would need approval from the Australian Competition and Consumer Commission and the Foreign Investment Review Board.
There were reports late last week that SABMiller was arranging a big loan for the bid.
