Foster’s has launched a AU$3bn takeover bid for Southcorp – a move condemned as ‘inadequate’ by the embattled Australian winemaker.
Following last week’s purchase of 18.8% of the company, Foster’s offered AU$4.17 per share for the entire company.
While condemning the bid as ‘opportunistic’ and ‘inadequate’, and urging shareholders to reject it, Southcorp chairman John Ballard admitted Foster’s and Southcorp would be ‘an excellent strategic fit’ as industry trends are ‘increasingly favourable’.
‘But I do not see those factors reflected in the offer price,’ he added.
Southcorp chairman Brian Finn said he believed Foster’s offer might well be an ‘opening bid’. He pointed out the Southcorp, owner of Penfolds, Lindemans and Rosemount, has the finest portfolio of wines in Australia.
If the deal goes ahead, the merge will create the world’s fourth largest wine company, with 38% of the Australian domestic market.
It is understood that in acquiring its 18.8% majority stake from the Oatley family, original owners of Rosemount, Foster’s has agreed to an “escalator” arrangement, which would enables the Oatley family to participate in any higher offer.
According to reports, Bob Oatley is advising shareholders to accept the deal in order to keep Southcorp’s assets in Australian hands.
Foster’s chief executive Trevor O’Hoy told ABC (Australian Broadcasting Corporation) that what they had offered was ‘a great price’ and that they were ‘determined’ to win at that price.
He added, ‘the deal will allow and retain Australian ownership of these great brands and on top of that, it would be my belief that this is the only Australian company that is number one in the world in any consumer product category.’
Written by Adam Lechmere, and agencies