SABMiller’s Grolsch and Foster's Gold.SABMiller reached an agreement to buy Foster's for $10.15 billion, ending a four-month long hostile takeover battle.
Under the terms of the deal, the giant global brewing company will pay 5.10 Australian dollars a share, an increase from its previous bid of 4.90 Australian dollars. Foster’s investors will also receive a special cash payout of 30 Australian cents per share, part of a previously announced capital initiative.
"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’s chief executive, Graham Mackay, said in a statement.
The Foster's deal is the latest for the acquisitive SABMiller.
In a transformative transaction, South African Breweries bought Miller from Philip Morris for $5.6 billion in 2002, renaming the company SABMiller.
Since then, it has filled out its global portfolio, expanding its reach into Latin America, Asia and Africa. In 2005, it bought a majority stake in Bavaria, one of South America’s biggest beer companies. And last year, it acquired Cervecería Argentina SA Isenbeck, the third-largest brewer in Argentina.
The Foster's deal has been among its most contentious.
For months, the Foster’s board had been reluctant to strike a deal, saying SABMiller's initial offer undervalued the company.
But SABMiller persisted and took the bid directly to shareholders in a hostile play for the Australian brewer. In an effort to thwart the acquisition, Foster's said in late August that it would return at least $525 million to shareholders, possibly through a share buyback. SABMiller countered, asserting that Foster's "misleading and deceptive" statements in its full-year financial results — claims that Australian regulators declined to move forward on.
With an acquisition of Foster's, SABMiller will gain exposure to market with high margins, albeit sluggish growth. Foster’s has a 50% share of the Australian industry, with 7 of the top 10 brands, including the No. 1 beer, Victoria Bitter.