June 22nd, 2011
05:56 AM GMT
Hong Kong, China (CNN) – Foster’s iconic slogan “Australian for beer” may soon be plastered over with one in Chinese, Japanese or Spanish.
SABMiller’s unsolicited attempt to buyout Australia’s number one brewer underscored its $10 billion offering as an undervaluation. And that’s knocked the beer goggles off other competitors.
They’re now sidling up to the bar to see if Foster’s is the cool refreshing beverage that could sweeten their portfolio too.
But can you imagine a Foster’s owned by China’s Qingdao, Japan’s Asahi or Mexico’s Grupo Modelo, which makes Corona? It’s possible, but SABMiller says hold on. The world’s number two brewer says it’s still in pursuit and the party’s just begun.
SABMiller CEO Graham Mackay extolled the virtues of Foster’s stability, presence and popularity on the company website.
“Foster's represents an attractive opportunity for SABMiller to acquire a leading brewer in a stable profitable beer market. Foster's is the Australian beer market leader, with a national footprint across all states and has a well-developed route to market. Its portfolio contains seven of the top 10 Australian beer brands.”
But after Tuesday’s failed try for Foster’s, Mackay will have to offer even more to get Australian attention. News of the offer fizzed up Foster’s stock, which saw its biggest one-day gain in more than 17 years. By Tuesday’s close, its share price had popped 13.47%. In comparison, SABMiller’s offer of $10 billion was just an 8.2% premium relative to Monday’s close.
Funny that in just 24 hours a pint of lager could get that much more expensive.
And evidence of Foster’s confidence came to a head through its reaction statement, curtly titled “Approach Rejected”:
“Foster’s Group Limited (Foster’s) announces 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.”
And with that, the lights came on and SABMiller found itself the “last guy in the bar”.
But Tuesday’s first round will likely be one of many more. Analysts believe SABMiller will be back again with a bit more cash in its pockets if it’s serious. At the same time, other companies have just now realized they might be thirstier for their own takeover than they realized.
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