Fosters has rejected a A$2.7 billion (£1.6 billion) offer for its wine division. Having announced that it is to divide its wine and beer businesses, the Australian brewer said the offer was too low, prompting share prices to rise by 27 cents to A$6.34 as investors took the news to mean that a better deal was in the offing.
The bid came from a private equity company, despite the wine division costing Fosters billions of dollars in write-downs. Experts have speculated that the bid may spark interest from another large brewer, safe in the knowledge that the wine company could be sold on.
Valuations of the wine business have varied hugely, from A$1.7 billion to A$3.5 billion. In light of Fosters decision to reject this recent offer, it appears that the brewer is holding out for the higher end of this valuation, for a division that includes brands such as Lindemans and Penfolds .
Fosters decision to listen to offers for its wine unit comes after a difficult few years for the Australian wine industry, which was hurt by a drought and a subsequent excess of grapes.
Australian Beer Brewer Rejects Bid for Wine Division
Thu, 09 Sep 2010
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