Shareholders call for a beer and wine demerger of the Foster’s Group

The Foster’s Group received a clear and concise message from its shareholders last week to separate its wine and beer interests. The nearly unanimous endorsement was to sell off the underperforming Treasury Wine Estates and remain focused on its Carlton and United Breweries beer.

The Australian reported outgoing CEO Ian Johnston as saying "since 1980s there’s always been something else hanging on to CUB, be it land or wine". And that a demerger will create “a beer company for the first time in 31 years".

Foster’s Chairman David Crawford believed the demerge would provide long-term benefits for the group’s shareholders.

"The Foster’s board believes the demerger will maximise aggregate long-term value for Foster’s shareholders as compared to the status quo, or a possible sale or an initial public offering of the wine business and that the advantages of the demerger outweigh any disadvantages of the demerger," he said.

However, The Australian also reported that Mr Crawford held reservations, by suggesting that the “demergers also held disadvantages, including the transaction costs ($150 million), additional corporate costs and higher credit costs incurred by the smaller entities”.


Image courtesy of https://media.apnonline.com.au

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