SABMiller in jobs pledge to seal Foster’s deal

Australian regulators have approved SABMiller’s A$11.5bn ($11.2bn) acquisition of Foster’s after the London-listed brewer agreed to keep the management of the beer company and its brewing facilities in Australia.

The nod from Australia’s foreign investment review board was the last regulatory hurdle for SABMiller, which first bid for Foster’s in June. The deal is expected to be approved by shareholders next week.

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SABMiller’s pledge to keep jobs in Australia comes amid frustration that the country is losing jobs, especially in manufacturing, to cheaper markets. Qantas, Australia’s flagship carrier, was hit by widespread strikes as unions protested against plans to move some maintenance and pilot jobs elsewhere in Asia.

The UK-listed brewer will “continue to invest in Foster’s iconic Australian brand portfolio” and keep both the management of the company and the breweries that make beer for domestic consumption in Australia, according to the treasurer, who reviews major foreign investments to ensure they are in the country’s national interest.

It is not very common for the treasurer or the foreign investment review board to place conditions on their approval of an investment, according to lawyers familiar with the review process.

The review board mostly raises concerns about deals involving foreign state-owned enterprises, particularly Chinese-backed mining groups, lawyers said. In April, the board rejected Singapore Exchange’s A$8.4bn bid for the Australian Stock Exchange due to fears by Canberra that it was not in the national interest.

The treasurer had the scope “to be sensitive to popular issues as well as sound economic issues” when reviewing proposed foreign investments, said James Philips, a mergers and acquisitions lawyer with Minter Ellison.

Foster’s, the lawyers said, was such a large and iconic company that the government would have an interest in ensuring jobs are kept in Australia.

“The treasurer did exactly what you would expect for a brand that has an iconic status. It’s about maintaining an Australian connection,” said Malcolm Brennan, a Canberra-based counsel with Mallesons Stephen Jaques.

The treasury was “very much focused on employment and ensuring there is at least a proper regard for the workforce by the incoming investor,” said Mr Brennan, who specialises in advising inbound investors.

SABMiller said the agreement would not impact its ability to absorb the new acquisition.

“Given the local nature of Foster’s brewing business and its focus on Australian customers, these undertakings are consistent with our current intentions for the business,” the company said.

SABMiller first bid for the company in June but Foster’s rejected its initial A$4.90 a share offer. In September, Foster’s backed a sweetened offer and last week the two groups reached agreement after sorting out outstanding tax issues.