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Fosters In Play
Iconic Australian brewer Fosters could be the target of an unsolicited bid originated by Canadian brewing major Molson Coors. For the last week there has been a mystery buyer in the market, and this has generated a speculative frenzy, lifting Foster’s share price to an 11 month high.
It emerged during yesterday’s trading session that Molson Coors was the mystery buyer and is either positioning itself for an outright acquisition, or as a contender to buy some of the business’s the brewing group is thinking of exiting.
Molson Coors has quietly acquired a 5 per cent stake, and this is likely to be of significant concern to newly appointed chief executive Ian Johnston. Mr. Johnston’s mandate given by Foster’s brewing chairman David Crawford is to revitalise the struggling company. That is going to prove difficult with a strategic investor perched on his shoulder whose motives could end up being outright hostile.
Foster’s on Thursday admitted it didn’t know what Molson’s intentions were and played down the possibility of a takeover. “Foster’s has not been informed of the precise extent of Molson Coors’ interest in the company nor their intentions with respect to that interest,” the company said in a statement.
Analysts believe Molson is buying itself a seat at the table ahead of a potential carve up of Foster’s huge portfolio. The move puts a pressure on Foster’s, which is undertaking a strategic review of all of its business’s that is scheduled to be completed before Christmas, but will not be released to the market until early next year
Foster’s must ensure its strategy ends up boosting its share price, or at the very least supporting it at current levels because any sign of weakness could spark a bidding war. In an investors briefing overnight in the US, Molson was at pains to stress that it regards the acquisition as an “economic investment” and plans were “fluid”.
Foster’s controls about 55 per cent of the domestic Australian beer market through its main beer brands VB and Crown, but carries A$4 billion in flagging wine assets.
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