E-Malt.com News article: 3978

Australia, Sydney: Australian brewing giant Foster's Group said on January 13 it had snapped up an 18.8% stake in Southcorp and was in negotiations with the winemaker that "may lead to a major corporate announcement." Shares in both companies were suspended from trading as speculation mounted that Foster's was looking to take over Australia's largest winemaker, which has long been seen as vulnerable to predators, according to Business Report.

"The company is currently in discussions which may lead to a major corporate announcement," Foster's said in a statement to the Australian Stock Exchange. Southcorp said its largest shareholder, Reline Investments Ltd, sold all of its shares to Foster's at A$4.17 a share or about A$584 million (R2.6 billion) in total. Southcorp last traded at A$4.25. The company - with key brands including Penfolds, Rosemount Estate, Wynns and Lindemans - returned to profitability last year after a tough two years that culminated in its paper being downgraded to junk status by international ratings agency Standard and Poor's.

The group was mauled by investors and top executive weres forced to resign as it continued to issue profit warnings as a world wine glut slashed earnings. A series of writedowns and restructures have improved the company's fortunes, leading to speculation of a takeover.

One wine sector analyst, who asked not to be named, said it was unclear whether Foster's was positioning itself for a full takeover or wanted to acquire a strategic stake to fend off potential interest from international companies. "Currently, I think the strategic position is probably more sensible rather than the outright takeover," the analyst said. "It puts them in a position to either make a takeover themselves later or to have a big say in how any takeover would pan out. "If Foster's does take over Southcorp, they need to justify it to the market and a lot will depend on the price that they would have to pay."


15 January, 2005