MELBOURNE Australian brewer Foster's FGL.AX rejected a $10 billion offer from rival SABMiller SAB.L for the second time, with shareholders holding out for a better offer from the global brewing giant.
SABMiller announced on Wednesday it would go directly to shareholders, to gain about half of Australia's beer market, with an offer of A$4.90 a share, but Foster's on Thursday said the offer significantly undervalues the company.
Foster's already rejected an earlier SABMiller offer of A$4.90 in June and has refused to engage in talks with its suitor. Its shares have since gone as high as A$5.25 and last traded at A$4.96.
"An offer price of A$4.90 per share significantly undervalues the company in the context of a change of control," Foster's said in a statement to the Australian Stock Exchange. "The high level of conditionality further detracts from the proposed offer," it said.
The cash offer will be reduced by any second-half dividend Foster's pays.
Shareholders said on Wednesday they expected this was just the beginning of the bid process.
"There's still plenty to play out," said Jason Beddow, chief executive at Australia's ARGO Investments, which holds Foster's shares, adding he would not take the offer "at this stage."
"It probably puts a bit more pressure on Foster's management because they are certainly going to get questioned a lot harder on ... their strategy and why they see value well above A$4.90," Beddow said.
Foster's said its recommendation was made alongside advisers Goldman Sachs, Gresham and Allens Arthur Robinson.
The Board of Foster's will set out its detailed views in relation to the SABMiller bid in a target statement to be mailed to all shareholders following the receipt of the bidder's statement.
"Foster's shareholders are advised to take no action and ignore all documents and communications from SABMiller in relation to its proposed offer," Foster's said. ($1 = 0.953 Australian Dollars)
(Reporting by Miranda Maxwell; Editing by Ed Davies and Balazs Koranyi)