Foster's needs to brew up standalone defence

Wed Jun 22, 2011 10:15am BST

By John Foley And Quentin Webb

HONG KONG, June 22 (Reuters Breakingviews) - If SABMiller goes hostile with its $12 bln approach, a winning counterbid for the Australian brewer looks unlikely. Most other big rivals are indebted or chasing racier markets. Foster’s needs a self-help plan fast -- to bag a higher offer, if not secure its independence.

Full view will be published shortly.

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CONTEXT NEWS

-- Foster's Group rejected an all-cash bid from SABMiller on June 21 that would have valued the Australian brewer at A$11.2 billion ($11.8 billion), including net debt. It said the A$4.90-a-share offer significantly undervalued the company. Shares in Foster's closed at A$5.20 on June 22.

-- Heineken, the Dutch brewer, appeared to rule itself out as a counterbidder on June 21, as chief financial officer Rene Hooft told Reuters the company would focus on emerging markets. China Resources, which owns China’s best-selling beer brand, Snow, also ruled itself out as a bidder.

-- Foster's spun off its wine business into a separately listed vehicle, Treasury Wines, on May 10, leaving its beer business, which holds half of the Australian beer market by volume, in a stand-alone entity. Its closest rival, Lion Nathan, was acquired by Japanese brewer Kirin in April 2009. 

-- Calculator: here

-- Reuters story: Foster's rejects $10 bln SABMiller bid [ID:nLDE75K1JW]

-- Reuters story: Heineken shows no appetite for Foster’s counterbid [ID:nLDE75K151]

-- Reuters story: China Resources says overseas deal possible, no interest in Foster’s [ID:nL3E7HM02D]

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-- The author is a Reuters Breakingviews columnist. The -- The author is a Reuters Breakingviews columnist. The opinions expressed are his own --

-- For previous columns by the author, Reuters customers can click on [FOLEY/]

(Editing by Chris Hughes and David Evans)

((john.foley@thomsonreuters.com)) Keywords: BREAKINGVIEWS FOSTERS/

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