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Foster’s cheers with beer & wine split
Published on 26 May. 2010 11:46 PM IST
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Foster’s Group, Australia’s largest brewer, said it will separate its struggling wine unit from its robust beer business, driving its shares up almost 9 percent as markets priced in potential takeover bids.
According to Reuters, the move brings down the curtain on a reported A$7 billion ($5.8 billion) wine expansion that began in 1996 when it bought Mildara Blass, which has its roots in the Barossa Valley, Australia’s most famous wine region.
It continued with acquisitions until as late as 2005, adding Southcorp for A$3.2 billion with its Penfolds and Lindemans brands.
But earnings from wine, which accounted for 40 percent of the group total as recently as three years ago, have slumped by nearly a quarter amid tough trading conditions.
“For the beer business, this is the first step on its way to being taken over,” said Theo Maas, an analyst at Arnhem Investment Management, adding he expected SABMiller’s Australian joint venture with Coca-Cola Amatil to emerge as frontrunner for the beer unit.
A Coca-Cola Amatil spokeswoman could not be reached for a comment.
Analysts said smaller rival Molson Coors, which owns a 5 percent stake in Foster’s, could also make a bid, perhaps jointly with a larger brewer.
Foster’s shares jumped as much as 8.7 percent to their highest in more than 3 months, in more than six times the normal daily volume.
The gain was its sharpest in a day since late-August 2006. The stock closed up 7.4 percent at A$5.53, outpacing a 1 percent gain on the main index.

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