Foster’s: Time For A Beer
November 24th 2006 16:38
If you, dear reader, drink beer, would you tell me when was it the last time its price went down?
The news today, 24 November 2006, is that the world’s largest brewer, the Belgian based InBev is bidding $15.2 billion or $7.50 a share for Foster’s. Foster’s shares closed today at $6.89.
Foster’s has been sought after since August for acquisition purposes by InBev, SAB Miler, the Sultan of Brunei and some private equity funds.
InBev requested its advisers to value Foster’s brewing business, including brands such as Carlton Draught and Victoria Bitter.
InBev is not apparently interested in the wine business owned by Foster’s such as Allied Domecq and Diageo. For Foster’s, according to some, divesting these business at this time may make sense.
This news was published in the online version of The Age, under the title “Foster’s cup runneth over on takeover rumours” and was written by Rebecca Urban. Click here to open this page: http://www.theage.com.au/news/business/fosters-cup-runneth-over-on-takeover-rumours/2006/11/23/1163871549599.html.
Foster’s (ASX: FGL) is a fantastic company which found a way to successfully market its product internationally.
Foster’s Net Profit After Tax grew in the last six years by 20 per cent compounded. Its current NPAT is $1,166.2 million, its Net Profit Margin is 11.9 per cent and its Return On Equity is 13.7 per cent which, all together, is just great.
Not surprisingly, its share price in the last 10 years almost tripled. And it pays a dividend of 21.5 cents for a Yield of 3.12 per cent.
FGL P/E, though, is almost 23 times making it look expensive. In comparison with Bonds, however, it results favourable: bond value is $19,437 million and capitalisation $13,964 million.
Foster’s has a very strong and visible brand name and is able to regularly increase the price of its products. Not surprisingly, its Operating Cash Flows have been growing at a rate of 23 per cent compounded.
Foster’s has also been expanding into other areas such as wine production, without much success and, as mentioned above, it may take the chance to divest it.
Another area of expansion of Foster’s has been non-alcohol drinks such as Torquay, Cascade Ginger Beer, Cascade Real Juices and others.
It has been speculated that it could expand into milk based drinks which have large margins.
All together, I envisage a great future for Foster’s.
So, if you own shares in FGL, would you drink an extra beer today?
End
The news today, 24 November 2006, is that the world’s largest brewer, the Belgian based InBev is bidding $15.2 billion or $7.50 a share for Foster’s. Foster’s shares closed today at $6.89.
Foster’s has been sought after since August for acquisition purposes by InBev, SAB Miler, the Sultan of Brunei and some private equity funds.
InBev requested its advisers to value Foster’s brewing business, including brands such as Carlton Draught and Victoria Bitter.
InBev is not apparently interested in the wine business owned by Foster’s such as Allied Domecq and Diageo. For Foster’s, according to some, divesting these business at this time may make sense.
This news was published in the online version of The Age, under the title “Foster’s cup runneth over on takeover rumours” and was written by Rebecca Urban. Click here to open this page: http://www.theage.com.au/news/business/fosters-cup-runneth-over-on-takeover-rumours/2006/11/23/1163871549599.html.
Foster’s (ASX: FGL) is a fantastic company which found a way to successfully market its product internationally.
Foster’s Net Profit After Tax grew in the last six years by 20 per cent compounded. Its current NPAT is $1,166.2 million, its Net Profit Margin is 11.9 per cent and its Return On Equity is 13.7 per cent which, all together, is just great.
Not surprisingly, its share price in the last 10 years almost tripled. And it pays a dividend of 21.5 cents for a Yield of 3.12 per cent.
FGL P/E, though, is almost 23 times making it look expensive. In comparison with Bonds, however, it results favourable: bond value is $19,437 million and capitalisation $13,964 million.
Foster’s has a very strong and visible brand name and is able to regularly increase the price of its products. Not surprisingly, its Operating Cash Flows have been growing at a rate of 23 per cent compounded.
Foster’s has also been expanding into other areas such as wine production, without much success and, as mentioned above, it may take the chance to divest it.
Another area of expansion of Foster’s has been non-alcohol drinks such as Torquay, Cascade Ginger Beer, Cascade Real Juices and others.
It has been speculated that it could expand into milk based drinks which have large margins.
All together, I envisage a great future for Foster’s.
So, if you own shares in FGL, would you drink an extra beer today?
End
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