€7.48bn price for brewery sealed over a few beers

BREWING giant SABMiller agreed to buy Foster’s Group for a sweetened price of A$9.9 billion (€7.48bn) yesterday after talks between the two last week ended in a couple of beers which sealed the deal this week.

Peace broke out in the acrimonious three-month bid battle as SABMiller chief executive Graham Mackay offered to raise its cash bid by 20 cents to A$5.10 a share, and then sat down with Foster’s chairman David Crawford to celebrate with a beer.

As part of the deal, Melbourne-based Foster’s will also return 30 cents a share as a capital return it promised in August after a tax refund and pay a final dividend of 13.25 cents. The total value of the deal, including debt, is A$11.5 billion.

Foster’s chief executive John Pollaers said the deal offers outstanding value for Foster’s shareholders, and emphasised the strength of the 150-year-old Australian beermaker having sought to turn around the business since his appointment in May.

“Today highlights once again the very bright future for Foster’s and demonstrates what a prized business this is in the global beer industry,” he told a briefing.

Analysts said the deal’s value was at the higher end of recent beer transactions at 12.5 times current year forecast core EBITDA profits, but Foster’s did have one of the highest profit margins in the beer world and, as one of the few big brewers still available to buy, had scarcity value.

SABMiller says the deal is part of its strategy of creating an attractive global spread of businesses to add to its operations largely in the emerging markets of Africa, Latin America, Asia and Eastern Europe, which are leading the recovery in the beer market worldwide.

The London-based brewer of Peroni, Miller Lite and Grolsch launched its initial bid for Foster’s at $9.5 billion, or A$4.90 a share, on June 21 and then went hostile by taking the offer direct to shareholders at the same price on August 17, but Foster’s rejected both as being too low.

It has been long seen as the favourite to take over Foster’s with other big brewing rivals saddled by high debts after recent deals.

Foster’s is seen as attractive with its high profit margins — due to its virtually duopoly with Kirin-owned Lion Nathan — although beer volumes have sagged recently with a poor summer and a consumer downturn, and analysts estimate SABMiller should be able to make A$140 million of annual costs savings.