SABMiller to launch Foster's bid after skirmish

SYDNEY/LONDON Thu Sep 8, 2011 5:51pm EDT

A Foster's logo is seen on a beer pump at an Australian themed bar in west London August 18, 2011. REUTERS/Toby Melville

A Foster's logo is seen on a beer pump at an Australian themed bar in west London August 18, 2011.

Credit: Reuters/Toby Melville

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SYDNEY/LONDON (Reuters) - Brewer SABMiller is set to launch its formal takeover for Foster's Group within days after an Australian regulator rejected its claim that Foster's had made misleading statements as part of a hostile A$9.5 billion ($10.1 billion) bid battle.

SABMiller had hoped to rattle Foster's takeover defense by casting doubt on information given at its annual results. The ruling allowed both sides to claim victory as it dismissed doubts over Foster's financial forecasts but did force Foster's to clarify its net debt position.

The Australian Takeovers Panel dismissed SABMiller's claims on Thursday that Foster's had made "misleading and deceptive" forward-looking statements over future sales and earnings growth, but had some concerns over its net debt figure which were allayed by a Foster's clarification.

Both parties accepted the panel's decision and SABMiller is now likely to launch its bid document, which could come as early as next week, at the same cash price of A$4.90 a Foster's share as originally proposed, sources close to the situation said.

"SABMiller is ready to go, so this ruling gives it the green light to formalize its bid as soon as possible at the same price," said one source with knowledge of the situation.

The publication of its bid document will trigger a takeover process which under Australian rules could take as little as seven weeks.

The London-based brewer has been turning more aggressive in its determination not to overpay, while Foster's has rejected SABMiller's approach on the grounds that it undervalues the company. That position was undermined by Foster's shares closing at A$4.85 on Thursday, below SABMiller's cash bid of A$4.90.

Foster's had dismissed the claims by its suitor, which related to statements Foster's had made in its annual results late last month. "It was pretty clearly frivolous and petty," a Foster's spokesman said of the application to the panel.

SABMiller welcomed the clarification: "SABMiller accepts the panel's determination and is pleased that Foster's has now clarified its debt position," the group said. Its shares were off 0.1 percent at 22.24 pounds by 1210 GMT.

Foster's released details of its submission to the panel, saying it had booked a deferred tax asset of A$447.5 million ($474 million) which reflected its success in a tax case, which helped clarify its debt figure.

"The panel concluded there was no reasonable prospect that it would make a declaration of unacceptable circumstances in relation to the financial objectives statements," the panel said in a statement released to the Australian Securities Exchange.

SABMiller, the world's second-largest brewer and home to Grolsch, Miller Lite and Peroni, first approached Australia's largest brewer in June and turned hostile on Aug 17, taking its offer directly to Foster's shareholders, and now has two calendar months from that date to submit a formal offer document.

Foster's, the maker of Victoria Bitter, Carlton Draught and Pure Blonde, reported a 9 percent slide in second-half profit on Aug 23, in a rare decline that showed beer margins falling for the first time in a decade and lower volumes.

Foster's has sold off virtually all its overseas operations to be largely an Australian brewer with a 50 percent share of its domestic market, where it earns some of the best margins in the developed world in a near duopoly with Kirin-owned Lion Nathan.

Once SABMiller launches its official bid it must lodge its offer document with the Australian Securities and Investment Commission (ASIC), which can take a maximum of 15 days to approve the bid, and then allow SABMiller to post it to Foster's shareholders.

The bidder is allowed three to four days to post the document and once the postage is completed, the minimum period the offer has to stay open is for one calendar month after the final posting date, although this can be extended.

($1 = 0.944 Australian Dollars)

(Reporting by Michael Smith, Sonali Paul and David Jones in London; Editing by Sophie Walker and Ed Davies)

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