SABMiller’s plans to make Foster’s biggest brewer in Australia

Following extensive speculation about whether Coca-Cola Amatil would buy a Fijian beer and spirits business previously owned by Foster’s, it looks like the company will spend the $58 million to seal the deal.

As part of London-based company SABMiller’s controversial takeover of Foster’s last year, where the chairman declared it has “significantly undervalued” its worth in its initial offer, it also gained the rights to the Fijian company owned by Foster’s.

Last year Coca-Cola Amatil sold its share in brewing business SABMiller, and at the time denied it had any interest in the alcohol market.

When SABMiller put Foster’s Australian spirits and ready-to-drink (RTD) business up for sale earlier this month, in a similar move to it’s Fijian sale, Coca-Cola decided not to buy it, but discussions are continuing.

And now the beverage giant has announced plans to buy an 89.6 per cent stake in Foster’s Fijian business, which is held in Foster’s Group Pacific Group.

The stake will cost Coca-Cola Amatil $58 million, and it has plans to then buy the remaining 10.4 per cent of the group.

When Foster’s was bought by London-based SABMiller last year, Coopers became the largest Australia-owned brewer, a reputation it pledged to protect.

“Being the largest Australian-owned brewer is a badge of honour we will wear with pride,” managing director Tim Cooper said.

“This represents the reward for 150 years of hard work in brewing by the Cooper family."

And while Foster’s is not Australian-owned, it could provide intense competition for Coopers, after the new chief executive Ari Mervis told investors of plans to make Foster’s the biggest brewer in Australia.

Amid the takeover bid and other related issues, Foster’s Australian beer sales fell 4.5 per cent in the six months prior to December 2011, and Mervis wants to change that.

At an investor’s meeting in London this week, he said SABMiller is aiming to increase its Australian sales by one to three percent each year over the next five years.

Profits are also expected to grow by 0.6 to 0.8 per cent each year.

His plan is dependant on improved sales confidence in Australia, which he said is improving.

Mervis, also confirmed to investors that, despite rumours to the contrary, Foster’s will not be closing any of its plants, including the iconic Carlton and United Breweries plant in Abbotsfield, Victoria.

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