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June 3, 2010 10:38 pm

Foster’s attracts interest from Bright Foods and Tsingtao

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This article is provided to FT.com readers by mergermarket—a news service focused on providing actionable, origination intelligence to M&A professionals. www.mergermarket.com
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Bright Foods, the Chinese food and beverage conglomerate, is taking a look at Foster’s [FGL:AU] wine and beer assets after receiving detailed information from bankers, a company source told mergermarket. Foster’s beer assets are also of interest to Chinese brewer TsingTao, a source at that company added. It has been reported that the beer division could be worth more than USD 11bn.

Bright Food is currently studying both wine and beer assets but has not decided to buy either yet. The company is on the lookout for global top ten players in wine, sugar, food packaging, commodities and healthcare sectors, it recently told this news service.

Tsingtao Brewery, one of the biggest players in China, is interested in hearing more about the beer unit of Foster’s, said a company source. The brewer, 20% held by Asahi Breweries, has not seriously considered whether or not it would bid, he added. No advisors have pitched Tsingtao so far.

However, a China-based FMCG analyst was skeptical about whether Tsingtao could generate synergies via an acquisition of an overseas counterpart. Tsingtao, known for its intention to expand its international market share, might find it difficult to manage an Australian company due to the cultural differences.

SABMiller [SAB:LN], the UK-listed beer giant, is likely to take a look at Foster’s beer business, said an industry insider, but it remains unclear whether some of the more levered industry majors, such as Heineken, ABI and Carlsberg, will show strong interest.

The demerger indicates that the company is open to discussions about the potential sale of assets, an industry insider suggested. However, the relatively long timeline of the demerger process probably stipulates that nothing immediate will be in the making, he added.

The demerger of Foster’s beer and wine businesses is subject to the outcome of comprehensive due diligence to ensure there are no impediments to the proceedings, it is understood. There are uncertainties in debt and equity markets, and the company will want to avoid the difficulties that CSR, the Australia-listed conglomerate, has faced in the demerger of its sugar business, it was said.

Assuming there are no difficulties during the due diligence process, a demerger of Foster’s businesses will be carried out, it is understood. However, should the board receive approaches for the wine or beer operations, then it will need to take them into consideration, it was said.

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