Australian brewer Foster's rejected a $10bn (£6bn) offer from rival SABMiller for the second time as shareholders hold out for a better offer from the global brewing giant.
SABMiller announced yesterday it would go directly to shareholders to gain about half of Australia's beer market, with a repeated offer of A$4.90 a share.
Foster's on Thursday said the offer significantly undervalues the company. Shares in the brewer, which is expected to report flagging profits on Tuesday, rose as high as A$5.03 on Thursday.
"They are doing the right thing. They probably will get a better price sometime down the track and this strategy is probably the right one," said Craig Young, portfolio manager at Tyndall Investment Management, which owns Foster's shares.
"The market thinks that a better price will be forthcoming. It expects something above A$5 and decently above A$5. So you're talking A$5.10, A$5.20, maybe even as high as A$5.30," he said.
The stock has gone as high as A$5.25 since SABMiller's first offer in June.
SABMiller, which makes Peroni, Grolsch and Miller Lite, has long been seen as the favourite to take over Foster's since rivals such as Heineken are struggling with debt or lack adequate funding.
City A.M. Reporter