SYDNEY: Foster's Group Ltd, the world's second biggest wine maker, lifted its shareholding in Southcorp Ltd to more than 90%, a threshold that allows it to buy the rest and access the company's cash. Foster's shares rose.
The company also extended its A$3.2bil offer for Sydney-based Southcorp, Australia's second largest winemaker, by a week until June 3, Melbourne-based Foster's said in a statement to the Australian Stock Exchange yesterday. After that offer ends, it will compulsorily buy the remaining shares.
Full ownership would allow Foster's chief executive Trevor O'Hoy, 50, to pay off debt with Southcorp's cash flow, which totalled A$121.9mil in the six months ended Dec 31, about 60% of Foster's cash flow in the same period.
Foster's, which borrowed about A$2.5bil to buy Southcorp, would have only been eligible for dividends if it had less than 100%.
“Getting more than 90% gets rid of the risk that they would fall short'' of that threshold, said Sean Fenton, who holds Foster's for the equivalent of US$650mil he helps manage at Jenkins Investment Management here. “Now they can strip out the costs and execute the strategic plans the bid price depended on.''
Foster's shares rose 17 cents, or 3.2%, to A$5.45 at the close of trade in Sydney. – Bloomberg
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