SABMiller Goes Hostile, But Price Set to Rise

SABMiller has engaged new tactics to get its hands on Foster's, but if the final price paid is too high it will impact our fair value

Philip Gorham, CFA 17 August, 2011 | 4:23PM
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Global brewer SABMiller (SAB) has taken its AUD 9.5 billion (£6.1 billion) cash offer for Foster's Group of Australia (FGL) hostile. The firm claims to have failed numerous times to engage the Foster's board in discussion and has now put the offer directly to shareholders. At this stage, we are maintaining our fair value estimate and our credit issuer rating for SABMiller, but we believe the company will raise its bid slightly, and we may decrease our valuation slightly if we deem the ultimate price paid to be too high.

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Philip Gorham, CFA  Philip Gorham, CFA, is an associate director of equity research for Morningstar.

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