AUSTRALIAN brewer Foster’s Group yesterday piled the pressure on SABMiller to raise its hostile takeover offer, unveiling a A$500 (£315m) capital return to shareholders.
The country’s largest brewer proposed to return money via a share buyback or capital reduction in an effort to get SABMiller to increase its £7bn offer, which Foster’s has twice rejected as too low.
The defensive move came as Foster’s reported a slide in annual profits, beer margins falling for the first time in a decade and beer volumes under pressure, with analysts saying SABMiller, which makes Peroni, Grolsch and Miller Lite, needs only to offer a little more to succeed.
“It is probably one of the few options that they have, so it’s not unexpected that they’re doing that,” said Theo Maas, a portfolio manager at Arnhem Investment Management.
“But I’m not sure if in the bigger scheme of things it’ll make any difference,” added Maas, saying that he struggles to see a materially higher bid emerging for Foster’s.
SABMiller declined to comment on the results or the capital return, but analysts in London said after such underwhelming results SABMiller may only have to raise its bid to around A$5.10 a share to win over Foster’s shareholders.
Foster’s, the maker of Victoria Bitter, Carlton Draught and Pure Blonde, reported a nine per cent slide in second-half profit to A$378.9m.
Its market share shrank with its profit margins.
The figures were hit by poor weather and weak consumer demand too its toll.
But chief executive John Pollaers said: “The turnaround of this company is clearly on track. Market share has stabilised, correcting a long-term period of decline.”