SABMiller wants Foster’s, bad. The conglomerate offered the iconic Australian brewer A$4.90 per share for a cash takeover back in June. But Foster’s decided to play hard to get, rejecting the offer on the grounds that it grossly underestimated the brand’s true value. SABMiller isn’t too keen on taking “no” for an answer, though – the company followed up its previous efforts with a much more aggressive approach, offering the same deal directly to Foster’s shareholders. In a desperate attempt to hold on, Foster’s Group has now countered by offering its shareholders an even bigger return of at least $500 million Australian dollars through a buyback or a cancelation of shares.
It’s a noble offer, but as the Wall Street Journal reports, it may be too little too late on the part of Foster’s Group Ltd. On Tuesday, Foster’s reported a net loss of A$89 million for the fiscal year to date due to discontinued items and declining beer sales in Australia in general (especially bad news considering that Foster’s owns seven of Australia’s ten biggest beer brands). Combined with an A$464.4 million loss last year, SABMiller’s offer is looking mighty tasty. “To me, this shows the board's overly conservative view of the world and, according to some critics, complete disconnect from what shareholders want," Credit Suisse analyst Larry Gandler wrote in a note to investors concerning the Foster’s Group offer.
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Still, Foster’s is hopeful that the company can turn things around and hold its ground against SABMiller. "A reinvigorated Foster's will, in time, be able to turn that trend around," Foster’s CEO John Pollaers reportedly said of the market downturn during a conference call. "We are going through a period of economic uncertainty, but we will come through that."
