Foster's presses for higher takeover bid
Source: Agencies |
August 24, 2011, Wednesday
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Print Edition
Print Edition
AUSTRALIAN brewer Foster's sought to put pressure on SABMiller to raise its US$10 billion hostile takeover offer, yesterday unveiling a A$500 million (U$521 million) capital return even as profits slid.
The country's largest brewer proposed to return money to shareholders via a share buyback or capital reduction in an effort to force SABMiller to increase its A$4.90 a share offer, which Foster's has twice rejected as too low.
Theo Maas, a portfolio manager at Arnhem Investment Management, said: "It is probably one of the few options they have, so it is not unexpected that they are doing that. But I am not sure if in the bigger scheme of things it will make any difference."
The stock market appeared to agree, with shares in Foster's barely moved by the news, inching seven cents higher to A$4.97.
Foster's, the maker of Victoria Bitter, Carlton Draught and Pure Blonde, reported a 9 percent slide in second-half profit, a rare decline that reflected a depressed beer market and potentially weakened its defense against SABMiller.
Foster's suffered as its market share outside pubs shrank along with profit margins, which were also squeezed by a price war among Australian supermarkets. Weak consumer spending, a shift from beer drinking and a wet summer also knocked earnings.
Chief executive John Pollaers put on a brave face, saying the company was about halfway through a three-year turnaround, with cashflows improving and cost cuts being reinvested.
SABMiller, maker of Peroni, Grolsch and Miller Lite, has long been seen as the favorite to take over Foster's given that rivals, such as Heineken, are struggling with debt or lack adequate funding.
The country's largest brewer proposed to return money to shareholders via a share buyback or capital reduction in an effort to force SABMiller to increase its A$4.90 a share offer, which Foster's has twice rejected as too low.
Theo Maas, a portfolio manager at Arnhem Investment Management, said: "It is probably one of the few options they have, so it is not unexpected that they are doing that. But I am not sure if in the bigger scheme of things it will make any difference."
The stock market appeared to agree, with shares in Foster's barely moved by the news, inching seven cents higher to A$4.97.
Foster's, the maker of Victoria Bitter, Carlton Draught and Pure Blonde, reported a 9 percent slide in second-half profit, a rare decline that reflected a depressed beer market and potentially weakened its defense against SABMiller.
Foster's suffered as its market share outside pubs shrank along with profit margins, which were also squeezed by a price war among Australian supermarkets. Weak consumer spending, a shift from beer drinking and a wet summer also knocked earnings.
Chief executive John Pollaers put on a brave face, saying the company was about halfway through a three-year turnaround, with cashflows improving and cost cuts being reinvested.
SABMiller, maker of Peroni, Grolsch and Miller Lite, has long been seen as the favorite to take over Foster's given that rivals, such as Heineken, are struggling with debt or lack adequate funding.
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