Bidding War Brewing In Beer Market: Foster’s Rejects SABMiller Offer
on 21/06/11 at 9:04 amBeer
SABMiller shook the beer market on Tuesday after it announced a $10 billion cash bid for Australia’s largest brewer, Foster’s Group. The unsolicited offer was quickly rejected as shares in Foster’s jumped past the offer price, as analysts see a possible bidding war with Japan’s Asahi and Mexico’s Grupo Modelo.
The $10 billion cash offer translated to A$4.9 per share ($5.18) and represented an 8% premium over Monday’s closing price, valuing Foster’s at 12.5 times estimated 2011 EBITDA.
Foster’s, with approximately half of the Austrialian market and 7 of the leading brands, rejected the “unsolicited, incomplete, non-bidding, and conditional” proposal considering SABMiller “significantly undervalues the company.” Markets seemed to agree, with Foster’s spiking 13% to A$5.14, it’s biggest intraday move since 1993. (Read Wodka And A New Business Model: Cheap Premium Vodka).