SABMiller plc proposal to acquire Foster’s Group Limited
Posted: 21 June 2011 | SABMiller | No comments yet
SABMiller has made a non-binding, conditional proposal to the Board of Directors of Foster’s to acquire all of Foster’s shares…
SABMiller plc (“SABMiller”) notes the announcement today by Foster’s Group Limited (“Foster’s”) and confirms that it has made a non-binding, conditional proposal to the Board of Directors of Foster’s to acquire all of Foster’s shares for A$4.90 per fully paid share1 in cash.
The proposal to acquire Foster’s is in line with SABMiller’s strategy to create an attractive global spread of businesses, with a focus on developing strong and successful brand portfolios. Australia has a strong, wealthy and growing economy with consistent long term population growth in key demographics, and is well positioned to benefit from continued economic growth in Asia. Australia has a profitable beer market in which Foster’s is the leading brewer with 7 of the top 10 beer brands2, a national distribution platform and scale production.
SABMiller has a proven track record of integrating brewing companies and improving the operating and financial performance of acquired businesses. SABMiller would use its expertise, best operating practices, management experience and global scale to enhance Foster’s leadership position, strengthen and develop Foster’s brand portfolio and improve Foster’s operations and profitability.
The SABMiller proposal was sent to the Chairman of Foster’s on 20 June 2011 with the objective of reaching agreement on the implementation of a scheme of arrangement. The proposal is subject to a number of conditions including satisfactory due diligence, agreeing the terms and conditions of a scheme implementation agreement and Foster’s board support.
SABMiller believes its proposal, which represents an enterprise value for Foster’s of A$11.2 billion3 and a F11 forecast EV/EBITDA4 multiple of 12.5 times, is attractive to Foster’s shareholders. The price represents a significant premium of 14.5% to the trading price of Foster’s of A$4.28 as at 2 June 2011 (being the closing price prior to the most recent round of speculation of a bid for the company) and with a significant premium of 18.4% to the adjusted closing price5 of Foster’s shares as at 25 May 2010 of A$4.14 (being the adjusted last closing price prior to the announcement of Foster’s intention to evaluate a demerger).
The proposal consideration is all cash, providing certain value at closing for Foster’s shareholders, and would be financed from SABMiller’s existing resources and new debt facilities. SABMiller is in a position to conclude an agreed transaction quickly.
As previously announced by Coca-Cola Amatil Limited to the Australian Securities Exchange, SABMiller has separately reached agreement with Coca-Cola Amatil Limited to acquire its share of the Pacific Beverages Pty Limited joint venture should SABMiller acquire a controlling interest in Foster’s.
Commenting on the proposal, SABMiller Chief Executive Officer Mr. Graham Mackay said:
“SABMiller has a proven track record of acquiring and integrating brewing companies in a way which benefits shareholders, employees, business partners and the broader community.
“We aim to strengthen the Foster’s brand portfolio and work with the local team to bring our innovation, global scale and expertise to the business.
“We continue to believe that the proposal price is attractive and offers good value to Foster’s shareholders. SABMiller can conclude a transaction quickly and will continue to seek engagement with the Board of Foster’s to put an agreed proposal to Foster’s shareholders.”
- Subject to adjustment for any dividends or distributions
- Source: Foster’s Demerger Scheme Booklet
- Assumes 1,942.8 million Foster’s shares based on the fully paid shares in issue per Appendix 3B dated 10 May 2011 (1,940.9 million) plus maximum Long Term Incentive Plan (LTIP) shares to be issued at 30 June 2010 as per Foster’s 2010 Annual Report (2.3 million), less the LTIP shares issued since 30 June 2010 per appendix 3Bs (0.4 million) plus net debt of A$1.883bn less ATO receivable of A$257m (Source: Foster’s Demerger Scheme Booklet) plus book value of minorities of A$17m (Source: Foster’s December 2011 Half Year Results)
- F11 EBITDA is calculated as the median F11 EBITDA forecast in the 8 brokers’ reports on Foster’s providing EBITDA forecasts which were published after 17 March 2011 (the date of release of the Foster’s Demerger Scheme Booklet) and were available to SABMiller as at the date of this announcement. For three of the broker sources used, SABMiller has adjusted the published EBITDA forecast to include associate income (which was excluded in the EBITDA figures published in those reports). The brokers’ F11 EBITDA forecasts (adjusted as described above) range from A$878 million to A$909 million with a median of A$896 million
- Foster’s closing share price on 25 May 2010 of A$5.15 adjusted by a factor of 0.804745 (Source: FactSet) to reflect the demerger of Treasury Wine Estates Limited. Adjustment factor based on the opening price of Treasury Wine Estates Limited on the first day of trading post demerger and the last closing price of Foster’s pre-demerger