Australian takeover panel rejects SABMiller Foster’s complaint

By Ben Bouckley

- Last updated on GMT

Related tags Foster's lager Takeover Mergers and acquisitions

Australian takeover panel rejects SABMiller Foster’s complaint
The Australian Takeovers Panel has rejected SABMiller’s claim that Foster’s published “misleading and deceptive” information in its financial results last week.

The panel’s announcement marks rising tension over SABMiller’s hostile A$9.5bn (€7.17bn) bid for the Australian brewer, with SABMiller’s announcing on August 17 that it would now take its A$4.90 per share bid directly to Foster’s shareholder.

This followed a Foster’s board announcement stating that multinational SABMiller’s bid significantly undervalued the business.

Multinational brewer SABMiller, headquartered in London, had sought an order from the panel to force Forster’s to make a public clarification of figures published in its 2011 full-year results presentation last week.

The Australian Takeovers Panel confirmed that it had received SAB Miller’s application “in relation to the affairs of Foster’s Group”​ and on Monday appointed a three-member board to decide upon the complaint.

No reasonable basis

SABMiller submitted that there was (in the panel’s words), “no reasonable basis for several forward-looking statements in the results presentation … concerning Foster’s financial performance.”

“Even if there was a reasonable basis,”​ said the panel in glossing SABMiller's complaint, “no information is provided to allow shareholders to test the basis of the statements”.

Thirdly, SAB insisted that Foster’s pro forma net debt figure of $887m (€669m) as reported was inconsistent with Australian Accounting Standards.

SAB Miller submitted that these statements did not meet the standards required of those made in the context of a takeover bid, and were “misleading and deceptive”.

The brewing giant also sought interim orders to prohibit Foster’s from making such statements until the application to the panel was determined, and forcing it to issue a clarificatory statement.

But the panel said today that there was “no reasonable prospect”​ that it would make a ‘declaration of unacceptable circumstances’ in regard to Foster’s financial statements.

However, it did express concerns about Foster’s net debt statement, but said these had been allayed by the firm’s offer to make a clarificatory announcement on how the figure was calculated.

Net debt clarification

A Foster’s spokesman said the company “strongly rejected" ​SABMiller’s allegations and welcomed the panel’s decision not to begin proceedings.

Clarifying the debt figure, Foster’s said its results presentation outlined Ashwick tax litigation impacts upon its net debt position as of 30 June 2011, where it has already received the bulk of a refund of around A$390m (€294.4m) from the Australian Taxation Office.

In addition to this, Foster’s said it would realise tax relief of $447.5m (€337.8), having booked this amount as a deferred tax asset in June 2011 in relation to the Ashwick tax losses.

SABMiller was not available for comment.

Acquiring Melbourne-basis Foster’s would give SABMiller access to about half the Australian beer market and brands such as Victoria Bitter.

Since SABMiller’s original move for Foster’s, falling market demand has weakened Foster’s position in preventing a SABMiller takeover or holding out for a higher price, as has the absence of rival bidders, analysts argue.

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