SABMiller Agrees to Buy Foster’s in $10.2B Bid

SABMiller Plc (SAB) clinched Foster’s Group Ltd. (FGL) with a sweetened A$9.9 billion ($10.2 billion) offer for Australia’s biggest brewer after three months of pursuit.

The U.K. company will pay A$5.10 a share in cash for the Melbourne-based brewer, SABMiller said today in a statement. The offer was previously for A$4.90 minus dividend payments.

The purchase will be the biggest ever by SABMiller and give it access to about half of the Australian beer market. SABMiller’s initial attempts to nab 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 fell 6 pence, or 0.3 percent, to 2,215 pence as of 11.34 a.m. in London. Foster’s fell 2 cents to A$4.89 at the close of trading in Sydney today. The agreement between the companies was announced after Australian markets closed.

Foster’s had previously resisted the offer as too low, instead focusing on CEO John Pollaers’ plan to return at least A$500 million to investors and revive earnings. SABMiller announced plans Aug. 17 to take the offer directly to investors.

Enterprise Value

“Foster’s will become an important part of our business, and through the application of our commercial capabilities and global scale, we expect to build on the initiatives that Foster’s management has put in place, further enhancing Foster’s performance and creating value for our shareholders,” SABMiller Chief Executive Officer Graham Mackay said in the statement.

The revised offer gives Foster’s an enterprise value of A$11.5 billion, SABMiller said. That’s 2.8 percent higher than the A$11.2 billion of its original bid, it said.

In addition to the offer, Foster’s shareholders will get 30 cents a share as part of a previously-announced return of capital, and a 13.25 cent final dividend for those who owned shares on Sept. 7, the Australian company said in a statement.

SABMiller has retained JPMorgan Chase & Co., Moelis & Co., Royal Bank of Scotland Group Plc and Morgan Stanley as financial advisers and Allen & Overy and Hogan Lovells International LLP as legal advisers, the U.K. brewer said.

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