Foster’s announced today that it would accept SABMiller’s bid of $10.2 billion. SABMiller had been courting the company for quite some time.
The purchase will be the biggest ever by London-based SABMiller and give it access to about half of the Australian beer market. SABMiller’s initial attempts to buy the maker of Victoria Bitter were rebuffed by Foster’s management as undervaluing the brewer, one of the world’s most profitable.
“The deal makes strategic and financial sense for SAB,” said Simon Hales, an analyst at Barclays Capital in London. “It’ll be taken well even though the headline offer price is slightly more than we would have hoped.”
SABMiller –the second-biggest global brewer by volume after Anheuser-Busch InBev NV (ABI.BT) — is keen to extend its proportional reach out of the fast-growing emerging markets, which in bring 80% of its profits, by building its position in developed consumer economies. Its dominant emerging markets footprint compares with around 50% recorded by its rivals.
Reuters highlighted the increasing global market for beer earlier this week. As light beer sales sink in the U.S., expect to see big players like AB InBev continue to aggressively pursue opportunities abroad.
It is worth noting that the first tweet about the deal came from a Beernews.org-like blogger in Australia called ozbrewsnews. [Unfortunately, his site is throwing some kind of phishing warning in Google Chrome (may be a false positive) so I’m not linking directly to it.]
You can read the full release directly from Fosters’ website.