MELBOURNE Top Australian brewer Foster's Group FGL.AX has scheduled a vote for April 29 on the planned spin-off of its wine business, with net assets of A$2.89 billion ($2.8 billion), it said on Thursday.
The beer and wine businesses are both expected to attract interest from trade buyers and private equity firms after they are separately listed.
Foster's already rebuffed an approach worth up to $2.5 billion for the wine business from private equity firm Cerberus Capital last September and said it would keep investors informed of any further approaches.
Independent expert Grant Samuel said the plan to give Foster's shareholders one share in Treasury Wine Estates for every three they hold in Foster's was in the best interests of shareholders, but warned the outlook for both groups would remain tough.
"Treasury Wine Estates will continue, in the short term at least, to face pressures on profitability caused by factors such as global oversupply of grapes, subdued demand for premium wines and the strong Australian dollar," it said in a report.
"New Foster's will face vigorous competition and market share pressure combined with continued low volume growth in the beer category."
The wine group, due to list on May 10, will have A$200 million in debt and around A$60 million in cash at the time of the spin-off, Foster's reiterated in its demerger document.
"New Foster's," the beer business, had A$1.95 billion in debt and about A$71 million in cash as of December 31.
The company said its interest costs are likely to increase by around 4 percent as it plans to convert its U.S.-denominated debt into Australian dollar obligations.
Treasury Wine Estates plans to target a dividend payout ratio of between 55 and 70 percent, while "New Foster's" will pay out at least 80 percent of net profit, Foster's said.
The final dividends for the wine group and "New Foster's" combined for the year to June 30, 2011, will be equivalent to what Foster's would have paid if the spin-off did not go ahead.
The company expects the spin-off to cost A$151 million before tax.
Foster's shares fell 0.4 percent to A$5.45, lagging a 0.1 percent dip in the broader market. ($1 = 1.024 Australian Dollars)
(Reporting by Sonali Paul; Editing by Balazs Koranyi)