Australian brewer Foster's Group should accept SABMiller's hostile A$9.5 billion ($10.1 billion) bid, broker Macquarie said on Thursday, adding the London-based company was already offering too much.
SABMiller, the brewer of Miller Lite and Peroni made an initial cash bid worth A$4.90 per Foster's share in June, then went hostile on Wednesday to take its bid directly to Foster's shareholders.
Foster's has rejected both approaches.
“Based on what we know about the company, its brand and the market, we do not believe that Foster's is worth A$4.90 per share. We recommend accepting the offer,” Macquarie analysts said in a research note.
There are no revenue synergies and limited cost synergies outside of eliminating public company costs in a deal linking Foster's near-50 percent share of the Australian beer market with SABMiller's share of around 1 percent, the analysts said.
“Foster's already generates the highest sales per hectolitre in the listed world and has the highest margins, so there is little prospect of revenue-driven margin expansion,” they said.
Taking debt into account, the enterprise value of the proposed transaction is A$11.2 billion.
Foster's shares closed up 0.8 percent at A$5.00 on Thursday. - Reuters