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Southcorp board says yes to Foster's increased bid

Published:  23 July, 2008

The Foster's Group looks set to take over Southcorp, following acceptances by the majority of the Southcorp board of the improved A$4.26 per share offer.

Foster's, through its Beringer Blass division, increased its offer by 12 cents and waived all conditions other than the minimum acceptance, which it reduced to 50%. The Southcorp board agreed to recommend the offer in the absence of a superior one, and agreed to assist Foster's in reaching the 90% compulsory acquisition threshold. Foster's already owns 18.8% of Southcorp, following the sell-out by the Oatley family. The family owned and built up Rosemount before the controversial reverse takeover, whereby Southcorp took over Rosemount, but the Oatleys and son-in-law Keith Lambert took over the enlarged company.

Foster's trumpets that the deal will make it the largest premium wine company in the world. President and CEO Trevor O'Hoy said: Foster's and Southcorp are a near-perfect fit. The combination of our two great companies will create the world's leading premium wine company and the first Australian consumer goods company to achieve global category leadership.

We are proud to be able to preserve ownership of Southcorp's iconic brands in Australian hands, and guarantee Australia's future in the global wine industry.'

Growers Down Under have expressed disquiet at possible consequences of the takeover. Michael De Palma of Murray Valley Winegrowers' Inc said: There are a great deal of growers who are going to be out of contract this year, and whether it means a re-signing with Southcorp or a hiatus remains to be seen.'

Bob Taplin of the Barossa Winegrape Growers' Council said: There are suggestions that the combined companies will change the winemaking operations currently undertaken by Southcorp.' The Coonawarra Vignerons Association is concerned that there may be winery closures and job losses. Association president John Innes said: Southcorp has very, very significant vineyard holdings within Coonawarra and very substantial holdings with Padthaway as well, and certainly Beringer Blass also has very significant holdings in both of those districts. They're already the two biggest players down here.'

Peter Simic, editor of Winestate magazine, has predicted job losses, particularly among the Southcorp workforce. He said: If I was working for Southcorp, I'd be pretty nervous at the moment.' Pointing out that the takeover will cement South Australia' as the centre of the Australian wine industry, he added: I expect what probably will happen is some of the players interstate will be shut, and South Australia and the Barossa in particular will become a very, very strong production source.'