Brewer SABMiller took its hostile $10 billion bid for Australia's Foster's directly to shareholders, according to Aug. 17 reports.
SABMiller bid $A4.90 per share for Foster's in June, valuing Foster's at A$9.5 billion ($10 billion), but Foster's CEO John Pollaers deemed the offer too low to consider. SABMiller then took the same offer directly to shareholders. Rival bidders have not stepped forward -- though Molson Coors Brewing (TAP) and Mexico's Grupo Modelo were reportedly in talks to make a joint bid for the target, according to June 3 reports -- and Foster's is considered by some analysts to have few other options.
"I don't think the offer on the table is fair value," Paul Xiradis, CEO at fund manager Ausbil Dexia, told Reuters. "Foster's is a prized asset with strong cash flow and at probably the low point of its earnings cycle. For an iconic business, that sort of an offer is undercooking it."Charles Stanley analyst Sam Hart said, "It is unlikely that Foster's shareholders would accept an offer at A$4.90, but it could be the catalyst for the Foster's board to engage with SAB and agree a recommended offer of up to A$5.40." Fosters' attractiveness stems from its high margins -- said to be around 37% for beer, nearly double that global competitors -- and 50% market share in Australia. Should a deal go through between SABMiller and Foster's, it would be the biggest consolidation in the brewing industry since InBev acquired Anheuser-Busch (BUD) for $52 billion in 2008. That deal marked the biggest cash takeover on record.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV