Foster’s shareholders to vote on the demerger
The Supreme Court of Victoria has ruled that a meeting of shareholders of Foster’s Group will take a vote on the proposed demerger of Foster’s beer and wine operations. The shareholders meeting will be held in Melbourne on Friday, 29 April 2011. Foster’s had said in February that they would proceed with the separation of their beer and wine operations into two separately-listed companies. It has finally been revealed that under the terms of the demerger, shareholders will receive one share in the wine unit, Treasury Wine Estates, for every three Foster’s shares.
Foster’s Group has been working to split its beer and wine businesses – calling the former New Foster’s and the latter Treasury Wine Estates – for more than a year, in a move it argues will realise better value for shareholders and probably attract takeover bids.
New Foster’s, which will house beer brands such as Crown, VB and Carlton Draught, is set to be headed by current Foster’s beer boss John Pollaers.
His colleague in the wine unit, David Dearie, will head Treasury Wine Estates.
At the end of March 2011, Foster’s shareholders received the scheme booklet for the demerger, which included detail on the make-up of both businesses, as well as the independent expert’s report by Grant Samuel that recommended the split.
According to Grant Samuel the wine business had been holding back takeover interest in the group and the best way to realise value was to split the divisions.
“The key benefits expected from the proposed demerger include enhancing the prospects for a change of control transaction involving New Foster’s and/or Treasury Wine Estates, thereby providing Foster’s shareholders with the opportunity to receive a premium for control,” the report said.
Although the plan to give Foster’s shareholders one share in Treasury Wine Estates for every three they hold in Foster’s was in the best interests of shareholders, the outlook for both groups would remain tough, Grant Samuel warned.
The wine group, due to list on 10 May 2011, will have AUD 200 million in debt and around AUD 60 million in cash at the time of the spin-off, Foster’s reiterated in its demerger document.
New Foster’s, the beer business, had AUD 1.95 billion in debt and about AUD 71 million in cash as of 31 December 2011.
The company said its interest costs are likely to increase by around 4 percent as it plans to convert its U.S.-denominated debt into Australian dollar obligations.
The company expects the spin-off to cost AUD 151 million before tax.
