Southcorp Urges Rejection of Foster's Bid
Monday, January 17th 2005, 10:19 am
By: News On 6
SYDNEY, Australia (AP) _ Australian winemaker Southcorp Ltd. urged shareholders Monday to reject a 3.1 billion Australian dollar (US$2.36 billion; euro1.8 billion) takeover bid by global brewing company Foster's Group Ltd. _ a step that would create the world's fourth-largest wine company.
Southcorp called the offer inadequate and opportunistic. Chairman Brian Finn said it did not ``adequately reflect the value of the company.''
``The board believes that Foster's offer of A$4.17 (US$3.17; euro2.42) per share may just be its opening bid,'' Finn said in a statement, adding that Southcorp _ whose wines include Australia's Penfolds, Lindemans and Rosemount, and Talomas in California _ has the best portfolio of wine brands in the Australian market.
Combining the two would create the world's fourth-largest wine company by volume, with a market capitalization of more than $10.6 billion.
``The board believes Southcorp shareholders should be adequately compensated for the substantial value that would be created from any combination,'' Finn said.
Last week, Foster's paid A$4.17 (US$3.17; euro2.42) per share to snap up an 18.8 percent stake in Southcorp from the Sydney-based Oatley family, Southcorp's largest shareholder and the founders of the Rosemount wine brand.
Foster's Chief Executive Trevor O'Hoy said the breadth and quality of Southcorp's wine portfolio would put the company at the forefront of the global premium wine industry.
``Our decision to proceed with this transaction has been made in the context of increasingly favorable industry trends and greater confidence in the outlook for the North American wine market and New World wine markets generally,'' O'Hoy said.
But Southcorp Chief Executive John Ballard described the Foster's bid as ``opportunistic'' because it comes as the company's earnings are depressed due to the Australian dollar's relatively high value, and an excess of wine on the global market.
However, Ballard said he agreed that Southcorp and Foster's would be ``an excellent strategic fit'' as industry trends are ``increasingly favorable.'' But ``I do not see those factors adequately reflected in their offer price,'' Ballard said.