Foster's rejects SABMiller cash bid

International beverage giant SABMiller Plc hopes to engage with the board of brewer Foster's Group Ltd to understand why Foster's has rejected a $9.51 billion takeover offer.
"We note the rejection of our proposal by the Foster's board," SABMiller chief executive Graham Mackay said in a market briefing.
"We seek to continue to engage for the purposes of understanding their perspective on value."
Melbourne-based Foster's on Tuesday rejected the all-cash SABMiller proposal, saying the bid undervalued the company.
Foster's announcement came after beverages group Coca-Cola Amatil Ltd (CCA) amended the terms of a brewing joint-venture with SABMiller to enable SABMiller to bid for Foster's.
SABMiller, the world's second biggest brewer by volume, made an unsolicited, non-binding and conditional proposal of $4.90 a share in cash for Foster's - an eight per cent premium on Foster's last trading price of $4.53.
Foster's shares jumped 61 cents, or 13.47 per cent, to $5.14, the highest since February 2007.
CCA shares gained 14 cents, or 1.24 per cent, to $11.46.
Foster's said on Tuesday that the SABMiller proposal "significantly undervalues the company in the context of a change of control and, as such, it (Foster's) does not intend to take any further action in relation to it".
SABMiller said Foster's was attractive because it was Australia's leading brewer with seven of the top 10 beer brands, and buying the company was consistent with its strategy to spread globally.
Australia itself was an attractive market because of its population growth and economic connections to Asia, London-based SABMiller said.
The Australian beer market was stable, profitable and a cash generator, and beer was relatively affordable.
However, Mr Mackay said that Foster's had lost market share, had been underperforming for some years and was continuing to underperform.
"We believe that this creates opportunities for us to apply our operational and commercial capabilities to enhance current performance and for Foster's to benefit from SABMiller's global scale," he said.
Mr Mackay said SABMiller's proposal price was attractive and offered good value to Foster's shareholders.
A takeover offer for the brewer has been widely anticipated since Foster's split its beer and wine operations in May into two separately listed companies.
Foster's brands include VB, Carlton Draught and Crown Lager.
The former Foster's wine business is now known as Treasury Wine Estates Ltd.
City Index chief market analyst Peter Esho said other global brewers would be running the numbers on Foster's after its rejection of SABMiller's bid.
"If Foster's thinks the deal is undervalued, it needs to really convince the market that 2012 estimates for net profit of $933 million are too low," he said.
"Until then, SABMiller can sit in the box seat and play its hand."
Mr Esho said it would be difficult for Foster's because discretionary spending was sluggish in Australia and there was the threat of more rate rises to come.
Belgium-based Anheuser-Busch InBev is the world's biggest brewer.