Foster's rethinks $4.5 billion wine sale

Global beverages company Foster's Group Ltd has reportedly dumped the option of a straight cash sale of its $4.5 billion wine business from its list of possible outcomes, given ongoing market and economic weakness.

The company's board scrapped the option because of poor economic conditions, a lack of buyers, and because it believed a valuation in the current market would be too low, the Australian Financial Review reports.

While Fosters declined to comment on the progress of its wine review, the paper said a demerger of the business to shareholders was still being considered. The AFR also said Foster's might sell some of its lower end wine brands to repackage the business as a premium offering.

The cost of a demerger could top $100 million, the paper said.

Foster's made news last week when it said North American brewer Molson Coors had bought a 5.3 per cent stake in the company, following Deutsche Bank's announcement that it had accumulated a 5.26 per cent interest in the local brewer in September.

The moves sparked speculation Foster's might be a takeover target.

Foster's said on Thursday it had not been informed of the precise extent of Molson's interest in the company or their intentions with respect to that interest.

Asked whether Foster's would be moving to mount a defence against a possible takeover, a Foster's spokesman said: "At the moment we are saying nothing because we don't know anything more than we did yesterday, besides the awareness of that stake."