Foster’s, the Australian drinks group, is preparing its takeover defences amid expectations that the sale or demerger of its wine business will lead to a scramble for its coveted beer operations.
“Wine has always been the poison pill so its sale or demerger would liberate the beer business,” a person close to the situation said.
Foster’s is working with Goldman Sachs JB Were, the Australian affiliate of the US investment bank.
The drinks group, which recently named Ian Johnston as chief executive after his predecessor Trevor O’Hoy took the fall for the group’s ill-fated foray into wine, is due to complete the “strategic review” of its wine business within about 10 weeks.
Analysts estimate that Foster’s beer assets could be worth close to A$12bn (US$7.8bn).
SABMiller, the London-based brewer, is a strong contender to bid for the beer brands if they come on to the market.
The brewer, which already owns the Foster’s brand in India and has a joint venture with Foster’s to brew and sell the brand in the US, is understood to be seriously interested in buying its rival’s beer assets, which include upmarket brands such as Cascade and Crown Lager as well as mainstream brands Victoria Bitter and Carlton Draught.
SABMiller already has a presence in Australia via its joint venture with Coca-Cola Pacific Ventures, which is building a brewery on the country’s east coast.
The venture sells SABMiller’s international brands, including Peroni Nastro Azzurro, Pilsner Urquell and Miller Genuine Draft, and last year bought Bluetongue, a boutique brewery.
JPMorgan says Australia is one of the most profitable large beer markets globally. “In any transaction SABMiller would gain access to stable mature market cashflow and possibly revenue synergies,” it said in a note to clients recently.
SABMiller is also trying to tap into a healthy market for boutique beers in Australia, which it estimates is growing at around 15 per cent annually. It believes it could do a better job than Foster’s in marketing the group’s brands, and make more money out of them.
Heineken may also look at Foster’s, but is tied up with integrating acquisitions in Europe and Asia after splitting up Scottish & Newcastle’s assets with Carlsberg earlier this year.
Molson Coors, the Canadian brewer which has merged its US business with SABMiller so the companies can compete more effectively with Anheuser-Busch, declined to comment.
Foster’s shares on Friday closed 37 cents lower at A$5.35, and have traded in a A$4.26 to A$6.96 range in the past 52 weeks.
Based on the last week’s close, Foster’s has a market value of A$10.3bn.