Foster’s could splash out on round for investors in face of SABMiller threat

The Australian group is expected to use its annual results tomorrow to unveil either a one-off payment or indicate bumper dividend payments over the next two years. Foster’s management has refused to engage in talks with SABMiller, which prompted the South African group to launch a hostile £6.1bn offer last week.

Its proposed price of £3.13 a share was pitched at the same level as the approach rejected by the Australian company’s board in June.

SABMiller has also attempted to apply more pressure by buying shares in the Melbourne-based brewer and is understood to have spent as much as £120m in recent days building up its holding.

SABMiller is the world’s second-biggest brewer by volume and has global brands including Pilsner Urquell, Peroni Nastro Azzurro and Miller Genuine Draft.

The industry has seen a spate of consolidation in recent years and SABMiller is interested in targeting Australia’s profitable beer market, in which Foster’s is the leading brewer with seven of the top 10 beer brands as well as a national distribution network and scale production.

The former South African Breweries is said to have put together a funding package of nearly £8bn that would enable it to raise its offer.

SABMiller said it believed that the proposal was attractive and should be put to Foster’s shareholders.

“As there has been no willingness to engage in relation to SABMiller’s proposal on the part of the Foster’s board, SABMiller has decided to make an offer to Foster’s shareholders directly,” it said in a statement.

Foster’s has become the subject of takeover interest after it sold off its underperforming wine business into a separately listed company in May.

Analysts have said other global brewers may be interested in Foster’s, which owns leading brands including VB, Carlton Draught and Corona.

SABMiller said its offer will be funded through existing resources and new debt committed by a number of financial institutions.

The proposal is subject to minimum acceptances of 90 per cent of the group’s shares. The Foster’s board rejected the proposal immediately.