British brewer SABMiller buys Foster's India

The United Kingdom-based SABMiller plc, one of the world's leading brewers, on Tuesday announced it has acquired Foster's India, belonging to Australian drinks giant Foster's, for $120 million on a cash-free debt-free basis.

Foster's India currently operates one brewery based in Aurangabad in Maharashtra with a licenced annual capacity of 350,000 hectolitres. The company produces, distributes and supports Foster's Lager, Amberro Mild and Amberro Strong beer brands in the Indian market.

Under the terms of the agreement, UK-based SABMiller will assume ownership of all Foster's assets in India including the Foster's brand in the territory.

SABMiller India, the subcontinent's second largest brewer, makes Royal Challenge, Haywards 5000, Castle and the recently launched Haywards Black, India's first stout beer.

The brewer said it would extend Foster's Lager beer through its national network of breweries and seek significant cost benefits from brewing and distributing the brand locally.

"SABMiller India's extensive footprint throughout the subcontinent, complemented by Foster's share of Maharashtra and the important Mumbai market, India remains a principal growth market for SABMiller," Andrew Parker, managing director of SABMiller Africa and Asia said.

He said: "This transaction enhances our existing portfolio in India and provides us with an exciting opportunity to further increase our premium brand offering."

"The acquisition also supplies much-needed capacity to fuel strong growth we have experienced so far this year."

India is the third largest market for the Foster's brand globally, with presence in 19 states and a substantial share of the mild beer segment in Maharashtra.

In the year ended June 30, 2006, Foster India's total beer sales were 236,000 hectolitres with Foster's Lager representing 88 per cent of total production, SABMiller said.

Trevor O'Hoy, president and chief executive officer of Foster's Group said: "This is an outstanding deal for Foster's Group, struck with one of our most important long-term partners."

While the Foster's brand has enjoyed great success in India, the opportunity for us to continue to grow the brand profitably from a small production and distribution base, in a challenging market structure, was limited.

"The value we have achieved through the outright sale of the Foster's brand, together with the brewery and local brands, far outweighs the potential future value of retaining Foster's and continuing to own and operate the business, or pursing a licence agreement," he said.

SABMiller plc is one of the world's largest brewers with brewing interests in over 60 countries across five continents. In the year ended March 31, 2006, the group reported $2,626 million adjusted pre-tax profit and a turnover of $15,307 million.