Asahi goes flat on Foster's beer

THE Japanese beer group Asahi Breweries has ruled itself out of the running to buy the Foster's beer arm in the lead-up to the historic $11 billion demerger of the Australian beverages giant, further thinning the ranks of possible buyers.

By InvestSMART · 10 Feb 2011

By InvestSMART ·
10 Feb 2011

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At an earnings briefing in Japan, the president of Asahi, Naoki Izumiya, said he had no interest in the Foster's beer assets which include leading brands such as VB, Carlton Draught and Cascade.

"The price is expensive and recently (Australia's) market is looking tough," Mr Izumiya told reporters in Tokyo.

The decision last year by the Foster's board to split its beer division from its global wine operation sparked speculation that a rival brewing company would swoop on the beer assets. Asahi and the British brewer SABMiller were touted as the front runners.

But as yet no company has come forward with a takeover proposal, increasing the odds that Foster's will strike its demerger without the hur-dle of a bid disrupting the process.

Japanese brewers and food makers have been particularly interested in buying overseas consumer goods businesses to broaden their exposure outside their stagnating domestic markets.

In 2009 Kirin, which also owned National Foods, launched a $3.5 billion acquisition of Lion Nathan, giving it a range of popular beers and beverages.

Two years ago Asahi Breweries bought Schweppes Australia's soft drink operation for $1.185 billion.

In August, Mr Izumiya said the company was considering expanding its ties with South Korea's top beverage company, Lotte Group, and that it wanted to lift its stake in Tsingtao Brewery of China.

Foster's will release its half-year results next week, when it is expected to provide further details about its proposed demerger.

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Frequently Asked Questions about this Article…

Why did Asahi rule itself out of buying Foster's beer arm?

At an earnings briefing Asahi president Naoki Izumiya said the company had no interest in the Foster's beer assets, calling the price “expensive” and saying the Australian market was “looking tough.”

What does Asahi’s decision mean for Foster's $11 billion demerger?

Asahi stepping back thins the list of potential buyers. With no takeover proposals yet, the article says it increases the odds Foster's will proceed with the historic $11 billion demerger without a bid disrupting the process.

Which companies were previously touted as potential buyers of Foster's beer business?

The article notes Asahi and the British brewer SABMiller were touted as the front runners to buy Foster's beer assets.

What beer brands are included in the Foster's beer assets mentioned in the article?

The Foster's beer assets cited in the article include leading brands such as VB (Victoria Bitter), Carlton Draught and Cascade.

Have other Japanese brewers bought overseas beer and beverage businesses?

Yes. The article points out that in 2009 Kirin launched a $3.5 billion acquisition of Lion Nathan, and that Japanese brewers and food makers have been active buying overseas consumer goods to broaden exposure outside stagnant domestic markets.

What recent overseas deals has Asahi already completed or been considering?

Two years earlier Asahi bought Schweppes Australia’s soft drink operation for $1.185 billion. The article also says Asahi was considering expanding ties with South Korea’s Lotte Group and wanted to lift its stake in China’s Tsingtao Brewery.

Has any company made a takeover proposal for Foster's beer arm yet?

No. The article states that as yet no company has come forward with a takeover proposal for the Foster's beer business.

When will Foster's provide more information about the proposed demerger?

Foster's is due to release its half‑year results next week, when it is expected to provide further details about the proposed demerger.