UPDATE 2-SABMiller, Asahi eye Foster’s beer unit; no bids yet

* SABMiller, Asahi looking at Foster’s beer unit – sources

* Foster’s shares jump 6 pct on report of SABMiller

* Foster’s has no formal takeover bids – source

* Molson Coors, Coca-Cola Amatil potential suitors –
(Adds details, quote, background)

By Michael Smith

SYDNEY, Aug 23 (BestGrowthStock) – Beverage giants SABMiller
(SAB.L: ) and Asahi Breweries (2502.T: ) are looking at Foster’s
Group’s (FGL.AX: ) beer operations, valued at more than $10
billion, but have not yet made any formal offers, sources said.

Long-running interest in the Australian brewer’s beer
business resurfaced on Monday after Britain’s Sunday Times
reported that SABMiller was considering buying the unit.

Fund managers are divided over whether a suitor would
emerge before Australia’s largest brewer formally splits off
the wine division in 2011 or wait, with complex debt and
structural issues to be resolved.

Foster’s has one of the highest-margin brewing operations
in the world with brands including Foster’s Lager, Victoria
Bitter and Pure Blonde.

Analysts say Foster’s beer business is an attractive target
for drinks firms such as Molson Coors (TAP.N: ), which owns a 5
percent stake in Foster’s, and Coca-Cola Amatil (CCL.AX: ).

“SAB and Asahi are the two names that keep popping up and
given the demerger process in train you would expect people who
ever thought they might look at Foster’s to get teams together
to do so,” said one source familiar with the situation. He
declined to be named as he was not authorised to speak to the

Another source said Asahi, Japan’s No.2 brewer after Kirin
Holdings (2503.T: ), remained interested. Nomura and Rothschild
are advising Asahi on this. Asahi declined comment.

Foster’s said in May it would split the beer unit from its
ailing wine business, putting Foster’s beer operations at the
centre of takeover talk in the drinks sector.

A takeover of Foster’s beer would be the second largest
takeover deal in the global food and drinks sector this year,
according to Thomson Reuters data.


Graphic on Foster’s share price performance:


StarMine data set on Foster’s and potential suitors:


Interview with Asahi president: [ID nTOE67107L]

Dealtalk on Foster’s beer bids: [ID:nLDE651053]


The takeover talk pushed Foster’s shares up more than 6
percent to their highest level in more than two years, with
volume 3.0 times the daily average over the past 30 days.

By 0500 GMT, the shares were up 6.2 percent at A$6.18.


A number of potential suitors including SABMiller and Asahi
have been looking at the business since Foster’s announcement
to to split its beer and wine operations, two sources said,
adding neither had formally decided whether to make an offer.

Fund managers are divided over whether a suitor would
emerge before Foster’s formally splits off the wine vision in
2011 or wait, with complex debt and structural issues to be

Responding to media reports, Foster’s said on Monday it was
not aware of any unannounced information driving the stock.

Analysts value Foster’s at around 13 times forward
earnings. However, most of the company’s value is locked into
the beer operations following a string of writedowns on its
underperforming wine business.

“It (a takeover) is probably not too likely in the near
future but once separation happens there will be some definite
interest,” said Daniel Nelson, investment analyst at
Constellation Capital, which owns Foster’s shares said.

“From a margin perspective it is a very profitable market
and the cash could be used to fund some of the developing
market aspirations.”

Sydney-based Gresham Advisory Partners is advising

The Australian newspaper reported on Monday that SABMiller
had hired JPMorgan and Royal Bank of Scotland as advisers for a
potential bid but no decision had been made.

SABMiller owns the brewing rights to Foster’s in the United

Asahi President Naoki Izumiya said this month he expects to
have $9.2 billion for acquisitions over the next five years,
with eyes on Asia and Oceania.

Japanese brewers have been scrambling to diversify, mainly
by by overseas acquisitions, to cut their reliance on the local
beer market, which has lost 15 percent in volume in the past
decade due to a sputtering economy and shrinking population.

SABMiller, the maker of Peroni and Miller Lite, generates
about 85 percent of its profits from the emerging markets of
Latin America, Africa and Asia. [ID:nLDE67F0HX]

Coca-Cola Amatil which has an Australian joint venture with
SABMiller, was also a likely predator, analysts say.
($1=.6431 Pound)
(Writing by Dhara Ranasinghe; Additional reporting by James
Topham in Tokyo; Editing by Anshuman Daga)

UPDATE 2-SABMiller, Asahi eye Foster’s beer unit; no bids yet