Australian Stock Saddle Company

Foster's shareholders suffer a $12bn hangover

Importantly, the curtain is being drawn by a London-based bidder extolling the virtues of the Australian market, its growing population, increased immigration numbers, proximity to Asia and all those advantages Australian corporates seem to forget.

While Australian company bosses complain about the appreciation of the Australian dollar, the Greens, the carbon tax and so on, SABMiller's Graeme Mackay is borrowing $12bn at admittedly cheap rates to play in the same sandpit.

It makes you wonder why cashed-up Australian corporates are not extending their vision beyond Australia, to take advantage of a strong currency to diversify their earnings base -- just as Mackay is, in reverse.

The SAB offer was just an opening bid, as shown by the market reaction. Foster's closed at $5.14 a share, 5 per cent above the bid price.

Serious talks will start around the $5.50-a-share mark, which would put the enterprise value of the beer business at $11.8bn.

The wine business, Treasury Wine Estates, also closed higher and has an enterprise value of around $2.5bn. This means the combined show has a value around $14.3bn compared to the pre-split value of around $11bn.

On that score, chairman David Crawford could claim credit for unleashing an extra $3.3bn.

Trouble is, shareholders have seen $12bn in present value terms being washed down the drain, as the beer business has been raided to fund the wine expansion. The tragedy got worse because, pre-split, the board was effectively running the show, having shown Trevor O'Hoy the door, and while costs were cut the beer business was losing market share and the company was on hold.

Crawford deserves praise for actually drawing a line in the sand, making the writedowns and splitting the company, but he and the same corporate advisers who are now selling the business were the ones overpaying for Southcorp, among other disasters.

Beer and wine proved strange bedfellows. Tragically, just as the beer business was getting on its feet under the leadership of John Pollaers, SAB has swooped, before he has had the chance to actually add value by running the business better.

True to form, while the bankers and lawyers were doing their bit, Pollaers was back on the job, trying to keep the place running.

The market interpreted the end of the Coca-Cola Amatil joint venture with SAB positively, with its stock price rising 1.2 per cent to $11.46 a share.

CCL's Terry Davis will pick up $380 million in compensation for a business earning a handful of dollars, but that is a one-off payment. He wouldn't say as much publicly, but Davis was gutted, because with the joint venture went a manufacturing expansion option.

Buckskin and Bay: For Sale Australian Stock Saddle

A horseowner and mom who juggles time between husband, kids and horses. I try and see things from the horse's perspective. I believe there is info to be learned from everyone, but it's up to me to decide if it is useful to me or not. I grew up riding hunter/jumper but have always loved trail riding. As an adult I explored cow working and dressage and continue to pleasure ride western and english. I have a retired gelding and a young buckskin gelding at home in our co-op barn. I worked in the purchasing offices of a big box retailer in my former career. Now I feed horses.

American Cowboy

American Cowboy

Susan and Tecate

Contemporary Public Speaking

Trail riding, train, prepare, pack up & hit the trail