FOSTER'S TO RAISE SOUTHCORP BID?

Published: 23 July, 2008

Reports in Australia are claiming that Foster's is preparing to extend the bid period for rival Australian wine company Southcorp for a fourth time next week, and will also increase its bid for the producer.

Analysts have predicted, however, that while Foster's will almost certainly raise its offer above its current level of $A4.14 per share, it is unlikely to meet the $A4.57 to $A4.80 per share valuation put forward in a report commissioned by Southcorp. I wouldn't be surprised if they raised the price a little bit and tried to get an agreement; it's a matter of who blinks first,' analyst Scott Marshall told Reuters. With the US dollar remaining strong and grape supply still outstripping demand, market conditions remain problematic for Southcorp. Earlier this week Southcorp's share price dipped below Foster's offer price for the first time since takeover talks began.

I think it is highly likely they will extend, especially given the way the market is behaving at the moment which is playing into their hands,' Argo investments managing director Rob Patterson told The Sydney Morning Herald. However, Merril Lynch analyst David Errington said in a report that Foster's cannot justify paying more for Southcorp', and that the only logical outcome' was for the deal to collapse.

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