Foster's 'unaware' of Heineken bid

Foster's says it is not aware of a potential takeover bid by Heineken

By CNN's Grant Holloway and wire services

SYDNEY, Australia (CNN) -- Australia’s biggest beverages group Foster’s Brewing Group says it is “unaware” of any potential takeover by Dutch-based beer giant Heineken.

Foster’s was responding to a story in The Australian newspaper Thursday saying Heineken had secured a $5.2 billion (Australian $10 billion) line of credit and was in talks with Foster’s management for a $7.7 billion friendly takeover of the group.

Fosters told the Australian Stock Exchange Thursday morning that, as a matter of company policy, it did not comment on speculation about its business activities.

“However, we can confirm that Foster's Brewing Group is not aware of any potential takeover offer by Heineken,” the company said.

Foster’s shares were trading A25c higher at A$5.30 on the Australian Stock Exchange Thursday, fueled by the takeover speculation. A $7.7 billion bid would offer a considerable premium on the company’s current market capitalization of around $5.2 billion.

Australian dollar trading higher

The Australian dollar was also trading as higher at 52.52 US cents on the speculation before slipping back mid-morning to US52.35c -- but still up from lows of US51c on Wednesday.

The Australian’s story said the privately owned Heineken had been actively raising funds in the eurobond market recently and that a Foster's spokesperson gave a firm "no comment" this week when asked to elaborate on discussions between the two groups.

The report said any bid would have to be friendly, however, as Heineken would rely on Foster's management's remaining in place to help run the business.

Heineken would be mainly interested in Foster's burgeoning wine interests.

The Melbourne-based group recently paid $1.4 billion for Californian winemaker Beringer Estates to add to its Australian Mildara, Wolf Blass, Jamieson's Run and Yellowglen brands.

Its Carlton & United operation brews Foster's, Victoria Bitter, Carlton Draught and Cascade beers.

Foster's shares have risen steadily this year as investors have awakened to the group's strategy of growing its wine production, which enjoys fatter margins than beer.

And Australian Prime Minister John Howard has bought into the takeover talk, telling radio audiences Thursday morning any such bid showed international investors had not been frightened away from Australian assets.

The Australian Government has been sharply criticized for knocking back a $5 billion bid by Royal Dutch Shell for Australian energy company Woodside, with claims the decision had sent the wrong message to international markets.

National interest basis for bid consideration

Howard told the Australian Broadcasting Corporation if an application for the takeover was received it would be considered on the basis of whether it was in the national interest or not.

"The fact there is a report of this possible takeover bid gives the lie to those people who said that if we rejected the Shell bid, we would frighten foreign investment away from Australia," he said.

"People were running around saying you have got to say yes to the Shell bid because if you don't, forever and a day foreign investment will be frightened away from this country and it doesn't look like they have been frightened away," Howard said.

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