Shareholders in Foster's Group Ltd voted yesterday to separate the beer and wine operations, a decision that could clear the way for potential bidders for either business.
The split will create Treasury Wine Estates, with $A1.9 billion ($NZ2.6 billion) in revenue and vineyards from the Hunter Valley near Sydney to Napa Valley, in California, while the new Foster's will remain Australia's largest brewer with revenues of $A2.6 billion.
"The advantages of the demerger include greater flexibility and enhanced focus on each business, the ability to adopt independent capital structures and financial policies, greater investment choice, increased transparency for investors and increased flexibility," chairman David Crawford said in a statement.
Mr Timms said the vote was good news for Foster's.
"There was a clear mandate from the board for this to happen and the shareholders obliged."
The wine business had been an awkward fit for Foster's, although there were signs the market had started to recover, he said.
Foster's shares had reached a low earlier this year of $A5.11 but were trading yesterday between $A5.75 and $A5.80.
They had reached a high of $A6.11 earlier this year and were seen by the market as a "good performer".
"We think 2011 will be a strong year for Foster's," Mr Timms said.
Reuters reported that Foster's received an offer worth $A2.5 billion last year for its wine business with labels including Beringer and Penfolds from US-based private equity firm Cerberus, which it rejected as too low.
The split could elicit interest from the likes of world No 2 brewer SABMiller for Foster's $A10 billion beer group - one of the last prizes in a globally consolidating beer market - or from other private equity firms.
One of Australia's largest buyout firms, CHAMP, snapped up the Australian and British wine operations of Constellation Brands in December for $A230 million, betting on an upturn in the wine cycle.
The wine business is valued at $A3.1 billion on Foster's books, or about half what the company spent on acquisitions in a rapid expansion at the top of the market. Treasury ranks behind Constellation as the world's second-largest wine company.
Foster's, which has been brewing its flagship brand since the 1880s, said separating wine and beer would help each business pursue its own strategy after efforts to jointly market the two failed.
The split
Shareholders of Foster's Group Ltd yesterday voted to separate the company's beer operations from its wine business to create two separate listed entities. The following are details of the plan and the new companies.:
THE DE-MERGER PLAN
• The proposal required the support of 50% of shareholders by number, and 75% of shares.
• Shareholders will receive one share in the new ASX-listed Treasury Wine Estates Ltd for every three Foster's shares held.
• Shareholders will also keep their shareholding in Foster's.
• Split is expected to be completed by May 9, subject to court approvals, with Treasury Wine Estates shares to start trading on the Australian Stock Exchange on May 10 under the symbol.
TREASURY WINE ESTATES
CEO: David Dearie.
• Revenues: $A1.9 billion ($NZ2.6 billion) in fiscal 2010 ended June 30.
• Key brands: Beringer, Penfolds, Wolf Blass, Rosemount.
• Volume: 35.6 million nine-litre cases in fiscal 2010.
• Market share (Australia): 22% of bottled wine.
• EBIT: $A202.6 million (fiscal 2010).
• Margin: 10%.
• Employees: 3089 as of March 3, in 17 countries.
• Gross debt: $A200 million.
FOSTER'S (POST-SPLIT)
CEO: John Pollaers.
• Revenues (fiscal 2010): $A2.56 billion. Of this, 97.6% generated by Australia's Carlton & United Breweries v 2.4% international beer business.
• Key brands: Foster's, Victoria Bitter (VB), Carlton Draught, Cascade.
• Volume: 113.8 million nine-litre cases (fiscal 2010).
• Market share (Australia): 50.3%.
• EBIT before one-offs: $A884.5 million (fiscal 2010).
• Margin: 37%.
• Employees: About 2300, mainly in Australia.
• Gross debt: $A1.955 billion.
