Today's announcement by Southcorp Limited (Southcorp) in relation to Foster's Group Limited (Foster's) is a clear acknowledgement that Southcorp is actually for sale and confirms that:
The valuation performed by Lonergan Edwards is questionable. Notwithstanding, it implies a stand-alone value for Southcorp of only approximately $3.10 per share and even this relies upon successful execution of Southcorp's recovery story which is unproven and at risk. In light of this, it is difficult to see how Foster's offer price of $4.14 cash per share (a 34% premium to $3.10 per share) is considered anything other than an outstanding one for Southcorp shareholders.
While Foster's will further consider Southcorp's merger proposal having regard to the best interests of its shareholders, it notes that the concept was raised by Southcorp and rejected by Foster's when the two companies were in discussions during their respective trading halts in mid-January 2005. In relation to what was outlined today, Foster's initial views are:
Southcorp's proposal serves only to endorse Foster's strong view that these two Australian companies should be combined to create the world's leading premium wine business. Foster's takeover offer, which represents the most compelling proposal for both Southcorp and Foster's shareholders and reflects the most realistic value of Southcorp, remains the best option for delivering this outcome.
Further information:
Media
Lisa Keenan
Tel: +61 3 9633 2265
Mob: 0409 150 771
Investors
Chris Knorr
Tel: +61 3 9633 2685
Mob: 0417 033 623
