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SABMiller agrees Foster’s purchase with raised offer

World’s second largest brewer agrees to buy Australian beer group with 10% price rise after months of bitter negotiation

SABMiller, the world’s second largest brewer, has agreed to buy Australian beer group Foster’s for just over Abn (£6.53bn), having raised the price it is prepared to pay by almost 10%.

The deal spells the end Foster’s brief life as an independent beer and cider group following the demerger of its wine division in May. The agreement ends months of hostile public exchanges between SABMiller and Foster’s. Last month the London-listed group threatened to take its offer direct to Foster’s shareholders, having become frustrated at what it claimed was the Australian brewer’s showing “no willingness to engage”.

Both sides played down past sabre-rattling on Wednesday, insisting the agreed deal had been the result of constructive talks behind the scenes.

Foster’s chief executive John Pollaers said: “It came as no surprise that SABMiller has made a compelling offer.” However, he would not be drawn on whether the company had received rival approaches.

SABMiller’s decision to raise its offer from A.90 a share to the equivalent of A.40 came against a backdrop of an 11% decline in the value of the wider stock market in Australia in the intervening period and a weakening in the Australian dollar against the US dollar.

The increase was in large part because SABMiller was persuaded that Foster’s had agreed a large tax debate with the Australian government, an issue which had sparked a row between SAB and the Australian takeover authorities. The London-listed firm will pay A.10 a share plus a special capital return worth 30 cents to cover the tax settlement. Foster’s stressed its sharesholders would also receive the company’s final dividend.

With brands such as Peroni, Castle, Miller Lite and Grolsch, SABMiller has long coveted a strong position in the Australian beer market. Some 90% of Australia’s beer market is shared almost evenly between Foster’s and Lion Nathan, with the latter owned by the Japanese brewer Kirin.

Wine, though, is now a more popular beverage in the country than beer. Foster’s sold off its own wine business, which includes the Lindemans and Rosemount labels, earlier this year – a move widely seen as a prelude to a sale of the rump beer business. © 2011 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds