Market expects more as Foster's rejects bid

FOSTER'S today rejected the £6 billion hostile takeover bid from London-based SABMiller, which has decided to go over the heads of the board and appeal direct to the Australian brewer's shareholders.

Shares in Foster's rose to A$4.99, ahead of the A$4.90 cash offer. Analysts said SABMiller could have to raise its offer to as much as A$5.20 a share to win the day.

"The board of Foster's, together with its advisers, has carefully considered the proposed offer and intends to unanimously recommend shareholders reject the offer," Foster's said in a statement.

The Australian brewer said the offer was also devalued by conditions attached to it, including the need for 90% acceptances.

"The high level of conditionality further detracts from the proposed offer," the Foster's board said.

The takeover also requires approval from Australia's Foreign Investment Review Board and the competition watchdog, the Australian Competition and Consumer Commission.

SABMiller, which makes Peroni, Grolsch and Miller Lite beers, said yesterday it would fund the cash bid from existing resources and a new multi-million debt facility.

Foster's is due to report its annual results next Tuesday. Analysts said that it would have to come up with considerably better figures than their current downbeat forecasts if it was to have any chance of seeing off the takeover bid.