Foster’s Now Would Consider Wine Buyout

Australian brewer Foster’s said it has held no further talks with the private equity suitor that made a $2.5 billion offer for its wine business in September, Reuters reported.

Chairman David Crawford repeated in October that the approach—reportedly by Cerberus Capital—was “totally inadequate,” but said the company would consider any further offers for its $3 billion wine business.

“We have said from the day we announced the proposal to consider a demerger that we were still prepared to consider all possibilities, and that includes consideration of any offers if they are made,” Crawford told the company’s annual general meeting.

He told reporters afterwards there had been no further discussions about the wine business with the unnamed suitor or with any other private equity firm.

Foster’s global wine business, which is second in size to Constellation Brands and includes Beringer and Penfolds, is expected to attract interest from other U.S. private equity players, including Kohlberg Kravis Roberts & Co. and TPG.

Private equity firms have some familiarity with alcoholic drinks businesses. TPG could be interested in buying back some of the assets it previously owned—it held about 55 percent of Beringer with some partners when it sold to Foster’s in 2000. And last year KKR bought the South Korean subsidiary of Oriental Brewery from Anheuser-Busch InBev.

Crawford said while the company would like to take advantage of the strong Australian dollar to pay down some of its $2 billion in U.S.-dollar denominated debt, such a move would incur significant fees and Foster’s was considering other options.

He reaffirmed the split of the wine and beer businesses was on track for the first half of 2011 and to meet that timetable, a shareholder vote was expected in March or April.

The brewer expects to return to a more predictable dividend ratio and timing after a hefty writedown for wine forced a delay in the last dividend payment.

Victoria Thieberger is a Reuters correspondent in Melbourne.