SPECULATION ON FOSTER’S FUTURE

Reuters featured an article on Foster’s this weekend speculating about the company’s future. There are several possibilities, which include separating the beer and wine assets, selling the beer or wine business, selling off wine brands one by one, or selling the entire company.

How did Foster’s get into this mess in the first place? Problems include Foster’s paying too much for Beringer and Southcorp in the past, the U.S. economic slump, the strong Aussie dollar and brands that management teams have failed to sort out. Foster's shares have tumbled 17 percent since it announced a review of its wine business last month, and the resignation of chief executive Trevor O'Hoy.

A Foster’s spokesman declined to tell Reuters if any unsolicited bids had been received. Potential bidders for the wine business include Diageo, Pernod Ricard and Constellation Brands, although it’s only speculation.

"I'm sure some big players are interested. The biggest question mark is whether they would be interested in the whole portfolio or whether they would start cherry-picking in terms of brands or regions, or wineries or vineyards," said Fortis Investment Partners portfolio manager Theo Maas.

Constellation ceo Rob Sands commented on July 1 that "our focus is on hunkering down and paying down debt," when asked if he was interested in Beringer.