Australian brewer Foster's Group sought to put pressure on SABMiller to up its $10 billion (£6bn) hostile takeover offer, unveiling on Tuesday a A$500 million (£316m) capital return even as profits slid.
The country's largest brewer proposed to return money to shareholders via a share buyback or capital reduction in an effort to get SABMiller to increase its A$4.90 a share offer, which Foster's has twice rejected as too low.
"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 which does not own Foster's shares.
"But I'm not sure if in the bigger scheme of things it'll make any difference."
The stock market appeared to agree, with shares in Foster's barely moved by the news, inching seven cents higher to A$4.97.
Foster's, the maker of Victoria Bitter, Carlton Draught and Pure Blonde, reported a nine per cent slide in second-half profit, a rare decline that reflected a depressed beer market and potentially weakened its defence against SABMiller.
Foster's suffered as its market share outside pubs shrank along with its profit margins, which were also squeezed by a price war between its biggest customers, Australia's top supermarkets. Weak consumer spending, a shift away from beer drinking and a wet summer that knocked demand also weighed on earnings.
Chief Executive John Pollaers put on a brave face, saying the company was about half way through a three-year turnaround, with cashflows improving and cost cuts being reinvested to promote its brands.
"The turnaround of this company is clearly on track. Market share has stabilised, correcting a long-term period of decline," Pollaers said.
"The key point is that we're getting on with business as usual. We are running Foster's for the long term."
Pollaers, the sixth chief of the beer group in seven years, made no mention of the SABMiller, after twice rejecting its offer as too low.
"We're as well placed as anyone, and I would almost go as far as saying better positioned than anyone, to manage the interests of our shareholders," he said.
SABMiller, which makes Peroni, Grolsch and Miller Lite, has long been seen as the favourite to take over Foster's given that rivals such as Heineken are struggling with debt or lack adequate funding.
In the second half, Foster's earnings before interest and tax fell to A$378.9m from A$416.5m a year ago.
City A.M. Reporter