Foster's Shares Surge After Report of SABMiller Bid

Foster’s Group Ltd., Australia’s biggest brewer, rose the most in almost three months in Sydney trading after a report SABMiller Plc may make a 7 billion pound ($11 billion) bid for its beer division.

Foster’s gained as much as 6.5 percent, the biggest intraday gain since May 26. Shares in the Melbourne-based company were 5.7 percent higher at A$6.15 at 1:51 p.m., giving it a market value of A$11.9 billion ($11 billion).

SABMiller, based in London, may make the offer for the Carlton & United Breweries division before it is split from Foster’s wine business next year, the Sunday Times reported yesterday without saying where it got the information. Foster’s said it is unaware of any unannounced information to explain its share-price gain.

“SABMiller is the most logical bidder, and I am sure they will be doing a lot of work on what they can bid,” said Theo Maas, who helps manage A$5 billion of equities at Arnhem Investment Management in Sydney. “Seven billion pounds would be a good opening statement if there is a bid.”

Nigel Fairbrass, a London-based spokesman for SABMiller, and Troy Hey, a spokesman for Foster’s, both declined to comment.

Wine Expansion

Foster’s Chief Executive Officer Ian Johnston announced plans in May to pursue a split after a A$7 billion expansion into wine was marred by falling prices and shrinking profit margins. No formal breakup is expected until 2011, Johnston said at the time.

Photographer: Luis Enrique Ascui/Bloomberg

Foster's Group's Carlton Draught beer bottle stickers are seen on a production line at the Abbotsford Brewery in Melbourne. Foster's rose 7.6%, the most since August 2006, to A$6.26 at the close of trading in Sydney. Close

Foster's Group's Carlton Draught beer bottle stickers are seen on a production line at... Read More

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Photographer: Luis Enrique Ascui/Bloomberg

Foster's Group's Carlton Draught beer bottle stickers are seen on a production line at the Abbotsford Brewery in Melbourne. Foster's rose 7.6%, the most since August 2006, to A$6.26 at the close of trading in Sydney.

Since the split was announced, media reports have linked Foster’s to potential offers from China’s Bright Food Group Co. and Tsingtao Brewery Co., as well as Japan’s Asahi Breweries Ltd., in addition to earlier reports of interest from SABMiller.

“The company is not aware of any unannounced information concerning it that explains the recent trading in the company’s securities,” Foster’s said in a regulatory filing to the stock exchange today.

Foster’s has about half the Australian beer market and gets 85 percent of its earnings from the beverage, through brands such as Victoria Bitter, Crown Lager and Pure Blonde.

The company reports annual earnings tomorrow.

To contact the reporter on this story: Robert Fenner in Melbourne at rfenner@bloomberg.net

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