The UK-listed brewer offered AUS $9.5bn (US $10bn) for Foster’s but the board of the Australian beer giant dismissed the unsolicited proposal.
“The board of Foster’s believes that the proposal significantly undervalues the company in the context of a change of control and, as such, it does not intend to take any further action in relation to it,” said Foster’s in a statement.
Nevertheless, SAB Miller is convinced that the price is attractive and has pledged to continue to pursue a deal.
“Early days”
Graham Mackay, SAB Miller’s CEO, said: “It is important to note that it is very early days in this process.”
“We continue to believe that the proposal price is attractive and offers good value to Foster’s shareholders. SABMiller will continue to seek engagement with the board of Foster’s to put an agreed proposal to Foster’s shareholders.”
The AUS $4.90 a share offer from SAB Miller represents a premium of 14.5 per cent on the Foster’s trading price from 2 June of AUS $4.28.
But since then shares in Foster’s have risen sharply as rumours of a takeover bid circulated. Today, news of the bid rejection sent the shares up a further 13 per cent to AUS $5.11.
Foster’s is the leading brewer in Australia with ownership of 7 of the top 10 beer brands. SAB Miller said the brewer is well placed in the Australian market where a growing population and a healthy economy bode well for beer.
Losing market share
But CEO Graham Mackay said Foster’s has failed to keep up with the market in recent years, adding that this create opportunities for SAB Miller.
“For some time, the company has lost market share and has been under-performing. We believe that this creates opportunities for us to apply our operational and commercial capabilities to enhance current performance and to use our global scale.”