Foster’s wine and beer bidders face major headache

Because of the strong Aussie dollar, the interest in Foster’s beer and wine units seems to be waning. That may buy Foster’s extra time and extend the shelf-life of its beer and wine units as independents once the split has been completed.

According to industry observers, the Japanese are already having second thoughts about a takeover of Foster’s beer unit CUB. Few think that Asahi is still seriously interested in CUB. Only in August 2010 had Asahi announced that it expects to have USD 9.2 billion on tap for acquisitions.

U.S-Canadian brewer Molson Coors is also said to be getting cold feet.

Perhaps all this moaning about the strong Aussie dollar is only part of an elaborate bargaining strategy aimed at knocking a few hundred million dollars off Foster’s asking price.

After all, Foster’s wine business, which has been rebranded as Treasury Wine Estates and owns vineyards from California’s Napa Valley to the Hunter Valley near Sydney, is seen as an attractive target for buyout firms because of depressed earnings after years of wine oversupply.

Several big private equity firms could easily club together and jointly finance a takeover. An equity cheque of 40 percent to 50 percent is seen as necessary for any deal but shouldn’t be an obstacle for global buyout firms, which are sitting on unspent billions raised during the boom years preceding the current crisis.

There you go.