UK brewer SABMiller to acquire Australian brewer Foster's for $10 billion

UK brewer SABMiller to acquire Australian brewer Foster's for $10 billion

2011-09-21 17:26:25 GMT+7 (ICT)

LONDON (BNO NEWS) -- UK brewer SABMiller PLC has agreed to acquire Australian brewer Foster's Ltd. for more than 10 billion U.S. dollar, the companies announced on Wednesday. The deal has been approved by Foster's board.

A statement issued by SABMiller, which is headquartered in London, said it has agreed to offer Foster's shareholders 5.10 Australian dollars (5.24 U.S. dollars) per share, valuing Foster's equity at approximately 9.9 billion Australian dollars (10.1 billion U.S. dollars).

In addition, SABMiller also said Foster's will pay its shareholders a return of capital of 0.30 Australian dollar (0.30 U.S. dollar) per share prior to closing of the deal. The agreed proposal puts Foster's enterprise value at 11.5 billion Australian dollars (11.8 billion U.S. dollar), up 2.8 percent from SABMiller's initial proposal on June 21.

"The acquisition is expected to be earnings per share (EPS) enhancing for SABMiller in the first full year of ownership and economic returns are expected to exceed the project Weighted Average Cost of Capital (WACC) by year 5," SABMiller said in a statement. "SABMiller and Foster's have agreed that the offer will be effected by means of a scheme of arrangement to be proposed by Foster's to its shareholders."

Foster's board approved the terms of the deal and urged its shareholders to vote in favor of the scheme and the capital return resolution. Should the deal not go ahead under certain circumstances, Foster's would be required to pay SABMiller a break fee of 99 million Australian dollars (101 million U.S. dollars), which is 1 percent of the deal.

The deal gives SABMiller a top position in the Australian beer industry, which the company called a "stable and profitable" industry. The company said it will also provide exposure to Australia's strong economic growth prospects and the opportunity to apply SABMiller's capabilities and scale to improve Foster's financial and operating performance.

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