Australia approves Foster's takeover
Fin24 - Nov 28th 2011, 07:50
Sydney - Australia on Friday approved brewer SABMiller's AU$9.9bn takeover of Foster's, but with strict conditions that will see key operations remain in the country.
Treasurer Wayne Swan said the deal was in the national interest.
"The government welcomes foreign investment in Australia and continues to ensure that investments are consistent with Australia's national interest," he said.
Given Foster's iconic status in Australia, he set certain conditions on the sale, which will put the brand in foreign hands for the first time in its 150-year history.
These include that management of operations for the company - which owns the nation's largest brewer, Carlton and United Breweries, and whose origins in Melbourne date back to the 1850s - remain in Australia.
British-based SABMiller [JSE:SAB] also promised not to relocate any of Foster's existing brewing facilities offshore to produce beer for Australian domestic consumption and to continue to invest in its Australian brand portfolio.
"SABMiller has agreed to a number of undertakings which recognise the significance of Foster's to our economy and to our community, and support Australian jobs," said Swan.
"In addition to Foster's undertakings, I have taken into account SABMiller's plans to strengthen Foster's brand portfolio and work with its local employees to bring its global scale and expertise to the business.
"I also note SABMiller's current intention that Foster's operational employees will remain in their existing roles on the same or substantially similar conditions to those which they currently enjoy," he added.
SABMiller's pursuit of Foster's is in line with its strategy of extending its global reach. Founded in South Africa in 1895, SABMiller operates in 75 countries, while it is also a major bottler of Coca-Cola.
In a statement, it said it understood and agreed to Swan's conditions.
"Given the local nature of Foster's brewing business and its focus on Australian customers, these undertakings are consistent with our current intentions for the business," it said.
SABMiller added that it has informed Australia's Foreign Investment Review Board that it is aware of the history and heritage of the Cascade brewery in Hobart, and understands its value to the local community.
The Cascade brewery, owned by Foster's, dates back to 1824 and is the country's oldest operating brewery. There was concern over what might happen to it once in foreign ownership.
The Foster's board agreed in September to an improved offer worth AU$9.9bn and the deal was also given the green light by the competition watchdog. The company's shares were trading slightly higher Thursday at AU$5.37.
Swan's approval marks the final regulatory hurdle, with shareholders now due to vote on the takeover at a meeting on December 1.
SABMiller said it remained confident that the acquisition would be completed before the end of the year.
A takeover had been expected since Foster's recent demerger of its wine and beer operations and amid consolidation within the Australian beverage industry.
With Lion Nathan already in the hands of Japanese brewer Kirin, the Foster's deal will leave Coopers as the biggest Australian-owned beer company, with around four percent of the market.
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