Today Australian brewer Foster’s announced that it has rejected massive global brewing conglomerate SABMiller’s cash takeover offer for AU$9.5 Billion, on the grounds that it significantly underestimates the true value of the company.
According to reports, SABMiller recently renegotiated terms of a joint venture with Coca-Cola, giving it the funds necessary to offer Foster’s a buyout at $4.90 per share of the company – at the time, with Foster’s stocks trading at $4.53 per share, it could have looked appealing. But, confident in its potential as a business, the board of directors at Foster’s held off.
"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 a representative from Foster's in an official statement.
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As if to validate Foster’s decision, Foster’s shares leaped 13 percent to a four-year high of AU$5.12. Still, others remain unconvinced that this was Foster’s best move, especially after speculation set 2012 net profit estimates for Foster’s at AU$933 million. Market analyst Peter Esho told USA Today that other companies will only further scrutinize Foster’s profits in the wake of this rejection.
SABMiller is also still hopeful that an agreement between the company and Foster’s can be reached in the near future. Following this initial rejection, SABMiller CEO Graham Mackay released an official statement stating: “We continue to believe that the proposal price is attractive and offers good value to Foster's shareholders.”