On 13 January 2005, Foster's Group Limited ("Foster's" or "the Group") announced the purchase of an 18.8% interest in Southcorp Limited ("Southcorp") from Southcorp's largest shareholder, Reline Investments Pty Ltd ("Reline"), the Oatley family's investment vehicle, for A$4.17 per share in cash, valuing the stake at A$584 million. Further details of the purchase are set out in the Substantial Holder Notice lodged on 14 January 2005. At the time of the announcement of the purchase both Foster's and Southcorp sought from the ASX and were granted a trading halt pending an announcement.
During the course of 14 to 17 January 2005, various discussions were held between representatives of Foster's and Southcorp. The purpose of those discussions was to enable the Foster's representatives to present the details of its proposal to the Southcorp Board and to seek Board support for the proposed takeover bid. These discussions proceeded amicably but no agreement was reached.
Foster's today announced that it intends to launch a conditional off-market takeover offer ("Offer") for the shares in Southcorp that it does not already own at a price of A$4.17 per share in cash. The sale price agreed with the Oatley family is extended to all Southcorp shareholders and values 100% of the shares in Southcorp at A$3.1 billion.
The Combination of Foster's and Southcorp is Strategically and Financially Compelling
The Offer:
An Outstanding Offer for Southcorp Shareholders
The Directors of Foster's consider this to be an outstanding Offer for Southcorp shareholders as it represents:
Mr Frank Swan, Chairman of Foster's, commented:
"The acquisition of Southcorp is an excellent strategic fit. It will enhance Foster's long-term global growth prospects and deliver significant benefits to shareholders of both companies.
"Our Offer reflects a premium valuation of the business, as recognised by the Oatley family through its decision to divest its strategic stake to Foster's at the price to be offered to all Southcorp shareholders."
Mr Bob Oatley, founder of Rosemount Estate, said:
"The combination of Foster's and Southcorp will write a new chapter of wine history and create a leading global wine company that is Australian owned, managed and based, and I am proud to be associated with its creation.
"I believe the price received for our stake is very attractive and I intend to invest a significant portion of the share sale proceeds into Foster's after the successful completion of the transaction, and thereby continue to participate in the ongoing success of Foster's and the Australian wine industry."
"Foster's is a logical partner for Southcorp with the resources, experience and track record to be able to maintain and further enhance Southcorp's distinctive wine quality and brand heritage," said Sandy Oatley, Bob's son and co-founder of Rosemount Estate.
"I am personally committed to working in partnership with Foster's to grow and develop the Rosemount brand," he said.
Southcorp Represents an Excellent Strategic Fit for Foster's
Foster's President and Chief Executive Officer, Mr Trevor O'Hoy said:
"The combination of Foster's and Southcorp will transform the global wine industry and significantly enhance Australia's competitive position on the global stage.
"It will create an enhanced platform for growth and deliver long-term benefits to shareholders, employees, customers and consumers of the combined company.
"The breadth and quality of our two highly complementary wine portfolios - including brands such as Penfolds, Wolf Blass, Rosemount and Beringer - will position Foster's at the forefront of the global premium wine industry. Foster's will become the leading provider of premium Australian wine to customers and consumers in Australia, the US and the UK, with sales of over A$2.6 billion equating to around 39 million cases of wine annually.
"We have welcomed the positive response of the industry since the announcement of the purchase of our initial stake and we are committed to working with growers, customers and other stakeholders during this process.
"Our decision to proceed with this transaction has been made in the context of increasingly favourable industry trends, and greater confidence in the outlook for the North American wine market and New World wine markets generally.
"In addition, it reflects very solid progress against the initiatives outlined as part of the Wine Trade Review in June 2004. Revenue growth and supply chain initiatives are on track, and we remain confident of our ability to achieve the earnings guidance communicated to the investment community in August 2004.
"We are confident that the proven track record of management teams in our Australian wine and beer businesses will enable us to integrate the two organisations, capture synergy benefits and retain the best elements of the two companies, while maintaining the momentum of our existing businesses. In doing so, we will adopt a measured, inclusive and partnership approach to integrating both organisations."
The Acquisition Will Deliver Significant Value
The acquisition will provide greater scale in key geographies and price segments for wine particularly in the US, the UK and Australia.
Information About Southcorp
Southcorp is a major Australian wine producer with a strong international presence. Southcorp sells approximately 20 million cases of wine per annum generating net sales revenue of approximately A$1.1 billion in the Americas, Australia and the UK. The company produces the great majority of its wines in Australia and owns viticulture assets of over 8,000 hectares (20,000 acres) in some of Australia's finest wine producing regions. Southcorp owns around 25 key brands in total, with leading brand rankings in Australia, and strong rankings internationally. Its four core premium brands are Penfolds, Rosemount Estate, Lindemans and Wynns Coonawarra Estate. In aggregate these core brands account for around 80% of Southcorp's total sales revenue and around 65% of total sales volume. Southcorp employs around 2,500 people.
Information About Foster's
Foster's is an Australian based, international multi-beverage company with a total portfolio of beer, wine, spirits, cider and non-alcohol beverages.
Its main businesses are its Australian multi-beverages company, Carlton and United Beverages (producing, selling and distributing beer, spirits, RTDs, cider, wine and non-alcohol beverages), Beringer Blass Wine Estates (producing, marketing and selling premium wine internationally), Foster's Clubs and Services (consumer direct wine clubs and wine services businesses) and Foster's Brewing International (responsible for the development of the Foster's Lager brand globally).
Foster's produces, markets and sells 19 million cases of wine annually, resulting in revenues of over A$1.4 billion. For the 12 months to 30 June 2004, sales of multi-beverage products in Australia generated revenue of almost A$2 billion, while sales of Foster's Lager in 155 countries internationally amounted to revenue of around A$255 million. Following the sale of all vineyards identified for divestment under the Group's June 2004 Wine Trade Review, Foster's will control approximately 7,800 hectares (19,500 acres) of vineyard plantings in Australia, New Zealand, California and Europe.
Foster's produces and markets Australia's famous beer, Foster's Lager, and premium wines such as Wolf Blass, Beringer, Yellowglen, Matua Valley, Saltram Estate, Jamieson's Run, Stags' Leap Winery, Chateau St. Jean, Meridian and Castello di Gabbiano. Foster's brews, markets and distributes Australia's leading beers including Victoria Bitter, Crown Lager, Carlton Draught and Cascade Premium Lager, and markets and distributes leading imported brands including Corona and Stella Artois. Foster's employs around 8,500 people.
Conditions of the Takeover Offer
The Offer is subject to the conditions referred to in Annexure A.
For further information:
Media
Lisa Keenan
Tel: +61 3 9633 2265
Mob: +61 409 150 771
Investment Market
Robert Porter
Tel: +61 3 9633 2560
Mob: +61 407 391 829
Annexure A (PDF, 337 Kb)
