Foster’s today announced that it intends to pursue a demerge its beer and wine operations to create separate stock exchange listings for each, subject to a detailed evaluation of the issues, costs and benefits to Foster’s shareholders and ongoing assessment of prevailing economic and capital market conditions.
“We are increasingly seeing the benefits of operationally separating the beer and wine businesses. While the beer and wine businesses are market leaders, they operate in separate market segments with different strategic and operating characteristics,” Foster’s chief executive Ian Johnston said in a statement.
Foster’s says the potential benefits of a demerger include increased transparency allowing investors to more appropriately value each business over time; greater investment choice; and flexibility for separate boards and management of beer and wine to develop their own corporate strategies and implement capital structures and financial policies appropriate to their businesses.
“We will proceed as quickly as possible, but priority will be given to ensuring that all relevant matters are carefully and rigorously examined with the intention of continuing to grow our businesses and minimising disruption to our customers, employees, suppliers and other stakeholders,” Mr Johnston said.
No decision has been made on the structure or timing of a demerger, which will depend upon, among other things, prevailing economic and capital market conditions.
Fosters says a demerger will be subject to all regulatory and statutory approvals and is unlikely to be implemented until the first half of calendar 2011, at the earliest.
The proposal comes after several years of speculation following Fosters’ troubled move into wine. It comes at a time when Fosters’ brewing operations are facing falling market share and intense competition from a resurgent Lion Nathan.