26 May 2005

Foster’s achieves 91% ownership of Southcorp and announces business integration to support strategic focus

Foster’s Group Limited (Foster’s) today announced that it had a relevant interest in 91% of the shares of Southcorp Limited (Southcorp). Foster’s offer for Southcorp has been extended by eight days and now closes at 5pm (Melbourne time) Friday 3 June 2005 following which Foster’s will commence compulsory acquisition of the remaining Southcorp shares.

Foster’s President & Chief Executive Officer Trevor O’Hoy said, “Today marks a milestone in the history of Foster’s and Southcorp. Together we have created the world’s leading premium wine company – and the only Australian consumer goods company to achieve global category leadership – as well as Australia’s leading multi-beverage business. We are proud to lead the further growth and development of an unrivalled portfolio of premium beverage brands.

“Our immediate challenge – and priority – is to stabilise and grow Southcorp’s brand portfolio and ensure business continuity throughout the integration process. We will seek to bring together the best of both businesses by taking a measured and inclusive approach and upholding the principles of dignity and respect.”

It is planned that most integration activity will take place only after Foster’s has undertaken a detailed review of Southcorp’s business in each market, estimated to take approximately two months. Integration planning will continue to progress through a dedicated integration team (including representatives from both Foster’s and Southcorp) reporting to the Foster’s senior executive team. Martin Hudson (previously Southcorp’s Chief General Counsel and Company Secretary) will stand down as Southcorp’s Interim Chief Executive Officer and transitional reporting lines will come into effect as soon as is practicable.

Integration plans will be tailored to each region. In Australia, where 80% of the integration activity will occur, Foster’s intends to focus primarily on integrating back office and support functions in the short term, with Southcorp’s sales and marketing teams remaining stand alone until early 2006, after the key Christmas trading period. In North America, integration will occur incrementally over the next 6 – 12 months. In the interim, the Beringer Blass Wine Estates (BBWE) and Southcorp sales teams will operate in parallel with each continuing to represent its current portfolio, and continuing to work with its existing distributor network. In Europe, alignment of the Southcorp and BBWE sales and marketing functions is expected to commence more quickly given the complexity of customer relationships in that market. In Asia (South-East Asia, Greater China and Japan) and New Zealand integration will take place following the business review phase.

Foster’s expects to be in a position to provide preliminary guidance on the expected future performance of the combined business at or around the time of Foster’s full year results, which will now be held on 30 August. A more detailed update on the integration process is planned to take place in late September.

Business Reorganisation
Foster’s also announced a number of changes to executive management responsibilities and the trading names of its operating entities. These changes reflect a new organisational structure that better aligns the Group to achieve its strategic objectives, including the successful integration of Southcorp. All of the changes to senior management responsibilities detailed below will take effect from 1 July 2005.

Foster’s Australia
Consistent with the Group’s strategy to be Australia’s leading multi-beverage business, the consumer and customer-facing and route-to-market elements (sales and marketing, fulfilment) of Carlton & United Beverages (CUB) and BBWE Australia will be integrated into a single business trading as Foster’s Australia. Southcorp’s sales and marketing operations will be integrated into Foster’s Australia in early 2006 as outlined above. The combined business will benefit from superior consumer, cross-category and shopper insights and be well positioned to offer a nationwide network of retail customers an increasingly tailored brand and service proposition. John Murphy (currently Managing Director, CUB) has been appointed to the role of Managing Director, Foster’s Australia. Mr Murphy will continue to be responsible for CUB’s supply chain operations. Production facilities will retain their existing names and visual identities.

Foster’s Wine Estates
Jamie Odell, currently Managing Director, BBWE has been appointed to the role of Managing Director of the newly created Foster’s Wine Estates. In this capacity he will lead the expansion of Foster’s international premium wine business, building on the strengths of the BBWE and Southcorp businesses. Mr Odell will be responsible for wine supply chain operations worldwide (including Australia), the marketing of global wine brands and all wine sales and marketing activities in North America, Europe and Asia. Specific trading names in these regions are yet to be finalised. Mr Odell will also assume responsibility for Foster’s multi-beverage business in New Zealand. Wineries and other production facilities will retain their existing names and visual identities.

Foster’s Brewing International
As Managing Director, Foster’s Brewing International, Rick Scully will continue to drive the Group’s global beer strategy and to lead and manage the marketing and sales of the Foster’s Lager brand worldwide. Mr Scully will continue to manage Foster’s Asian brewing operations, as well as manage all of the Group’s relationships with key international brewing partners.

Foster’s Wine Clubs and Services Businesses
Neville Fielke, Managing Director, Wine Clubs and Services, will continue to focus on the successful implementation of the business improvement program underway within this specialist channel. A number of initiatives have already been implemented to improve profitability and returns including various organisational changes, key appointments, and initiatives to simplify the business and ensure greater sharing of resources across the broader Foster’s Group. Mr Fielke retains his responsibilities as Senior Vice President Group Strategy and Business Development.

Foster’s Group Functions
Following the retirement of Peter Bobeff as Foster’s Senior Vice President Commercial Affairs, Martin Hudson has been appointed to the role of Senior Vice President Chief Counsel. There are no other changes to Foster’s senior management team, with Pete Scott continuing in his role as Chief Financial Officer and Ben Lawrence continuing in his role as Senior Vice President Human Resources.

Commenting on the executive management changes Foster’s President & Chief Executive Officer Trevor O’Hoy said,

“Over the past twelve to eighteen months we have made significant progress towards unlocking the opportunities and synergies presented by a unified business model through closer integration of our global businesses, processes and capabilities.

“Our aim is to satisfy more consumers in more venues and on more occasions than our competitors. By streamlining the way that we go to market in Australia we will be better able to understand and respond to the needs of our customers and consumers and deliver a superior customer service and portfolio offering as a truly multi-beverage company in this market.

“In addition, the global management of supply chain, innovation and marketing activities within our wine business model will create a more flexible and responsive platform to achieve our goal of global leadership in premium wine.

“We have established the right model for the business we have today, and importantly a model with the flexibility to adapt to the shape of the business we envisage as we grow into the future. In particular, the realignment of our existing operating model will provide a stronger platform from which to integrate and grow the Southcorp business.

“The refinements to global executive management responsibilities will provide significant development opportunities for our senior executive team. These changes reflect another step in the evolution of our business as a leading premium beverages company and will sharpen our strategic focus on placing the consumer and customer at the heart of everything we do.”

Further information:

Lisa Keenan
Director - External Communications
Tel: +61 3 9633 2265
Mob: 0409 150 771

Chris Knorr
Vice President - Investor Relations
Tel: +61 3 9633 2685
Mob: 0417 033 623

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