Foster's rejects wine offer

Foster's reported a net loss for 2009/10. Photo / Alan Gibson

MELBOURNE - Global beverages firm Foster's Group has rejected a non-binding proposal to buy its Treasury Wine Estates wine assets for A$2.3 billion to A$2.7 billion ($2.91 billion to $3.42 billion).

The Foster's board said yesterday it believed that a proposed separation of the wine business from Foster's beer business, through a demerger, was still the best outcome for shareholders.

The indicative proposed value range "significantly undervalues" Treasury Wine Estates and its future prospects, Foster's said.

A Foster's spokesman declined to identify the private equity firm because the proposal had been made confidentially.

The spokesman said the Foster's board had considered and rejected the proposal yesterday morning.

Analysts have valued Treasury Wine Estates at around A$2.9 billion, excluding a premium for control of the assets.

Last month, Foster's reported a net loss of A$464.4 million for 2009/10, compared with a net profit of A$438.3 million in the year before.

The result included a previously-flagged non-cash impairment of A$1.16 billion against the carrying value of the group's wine assets.

Foster's sold less beer and wine by volume as consumer sentiment in the beer market softened and conditions in the wine sector were mixed.

Earnings from Treasury Wine Estates fell 27.2 per cent to A$221.3 million, with unfavourable exchange rates having a major impact.

On a constant currency basis, earnings rose 20.5 per cent, with earnings more than doubling in the second half.

- AAP