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Published:  23 July, 2008

By Jack Hibberd

Southcorp's board has come out fighting - hardening its rejection of the $4.17 a share bid by Foster's and publicly discrediting the Oatley family's claim that they had negotiated a great price' for the iconic Australian winemaking giant. Southcorp's bid response document, published last week, makes the company's feelings clear: Your directors recommend unanimously that you reject Foster's opportunistic, unsolicited and inadequate offer.' Southcorp's claims are made on the basis of better-than-expected half-year results released last week - with pre-tax profits up 58%, cash flow improvememt of 35% and the first dividend payment since 2003 - along with aggressive profit targets to 2006, some A$165 million higher than this year. The company also claims that Foster's has underplayed the potential value of synergies resulting from a merger, which it estimates at $160 million dollars or $2.13 a share. The Southcorp board also pointed out that the Oatley family - who have already agreed to sell their 18% stake in the company to Foster's - have been given extra benefits for selling their shares, including distribution deals for the Oatley family's own wines. Southcorp is backed by Stuart Wilson, executive officer of the Australian Shareholder Association, who wrote in a recent report: The whole situation favours the Oatley interests at the expense of ordinary shareholders.' Fosters responded that its offer price was fair, and that it was not in a rush to buy.