Foster’s Group has again rejected a hostile $9.51 billion takeover bid by UK-based behemoth SABMiller plc, saying once more the offer price of $4.90 per share significantly undervalues the company.
Foster’s brands include mainstream beers such as VB and Carlton Draught, plus premium labels such as Cascade and Fat Yak.
“The board of Foster’s, together with its advisers, has carefully considered the proposed offer and intends to unanimously recommend shareholders reject the offer,” Foster’s said in a statement.
“The board of Foster’s reiterates its belief that an offer price of $4.90 per share significantly undervalues the company in the context of a change of control.”
Foster’s shares were four cents higher at $5.00 on Thursday.
The Australian brewer said the offer also was diminished by conditions attached, including 90 per cent acceptance by Foster’s shareholders.
The offer also would be reduced by the value of any dividends the Foster’s board might pay during the offer period.
The takeover also requires approval from Australia’s Foreign Investment Review Board and the competition watchdog, the Australian Competition and Consumer Commission.
“The high level of conditionality further detracts from the proposed offer,” the Foster’s board said.
“Foster’s shareholders are advised to take no action and ignore all documents and communications from SABMiller in relation to its proposed offer.”
The bid is similar to an earlier proposal put to Foster’s by SABMiller in June, which Foster’s also rejected as undervaluing the group.
SABMiller on Wednesday said the Foster’s board had shown no willingness to engage its proposal, so it had decided to make a direct offer to Foster’s shareholders.
City Index chief market analyst Peter Esho said SABMiller had not increased its offer but had made it official, putting it to Foster’s shareholders in the absence of other bidders.
Mr Esho said to fend off the bid, Foster’s needed to show that the market’s estimate for its earnings were too low and the SABMiller offer was, therefore, unreasonable.
Foster’s is due to report its annual financial results on August 23.
Morningstar analyst Nathan Zaia said in a research note that SABMiller’s offer not enough to justify Foster’s shareholders selling their stock.
“The offer is being made at a somewhat opportune time,” he said.
“SAB Miller appear to be using uncertainties around Foster’s growth prospects and an Australian beer industry experiencing relatively flat volumes.”
