Foster’s Bids for Control of Rival Australian Winemaker

Foster’s Group Ltd., Australia’s biggest brewer and winemaker, today offered $1.9 billion for the rest of rival Southcorp Ltd. to gain control of top-selling Australian wine brands such as Penfolds and Rosemount.

The offer by the Melbourne-based company represents the same share price it paid last week to the family interests of Robert Oatley, Rosemount’s founder, for an 18.8% stake.

Southcorp, based in Sydney, rejected the buyout offer as “inadequate and opportunistic.”

A takeover would couple Foster’s U.S. brands with strong Australian brands that Southcorp owns, said Rupert Clifton-Bligh, who helps manage the equivalent of $190 million, including Foster’s stock, at Berren Asset Management in Sydney. “Southcorp needs a bit of a cash cow like Foster’s right now to rebuild its brands,” he said.

The enlarged company would overtake Constellation Brands Inc. of New York as the world’s biggest seller of premium wine. Southcorp shares rose on speculation that Foster’s would have to raise its offer or fend off bids from Constellation or Diageo.

Diageo of Britain last month agreed to buy California-based Chalone Wine Group Ltd., and Constellation bought Robert Mondavi Corp. of Napa Valley.

An agreement by Foster’s to increase the amount paid to the Oatley family for its 18.8% stake if the bid to other shareholders is raised suggests that the offer may “just be its opening bid,” Southcorp said in a statement.