Heineken shows no appetite for Foster’s counter bid

Heineken shows no appetite for Foster’s counter bid

Amsterdam: The world’s third-largest brewer Heineken appeared to rule out a multi-billion dollar counter bid for Australia’s Foster’s Group as it said growth outside Europe would come from emerging markets.

The Amsterdam-based brewer of its eponymous beer, Amstel and Dos Equis has made recent acquisitions in the emerging markets of Mexico, Nigeria and Ethiopia, and analysts say it shows little interest in the mature beer market of Australia.

“If you look at our expansion strategy, we see Europe as our home base. Europe is to a large extent mature, profitable, but a very mature market, so you see that the expansion we do outside Europe will be in emerging markets," Heineken’s chief financial officer Rene Hooft Graafland told Reuters in an interview on Tuesday.

“To do a mature deal completely outside that base is not making sense. Better spend your money on Mexico, Brazil, or Africa, or Asian markets," he added.

He declined to comment directly on any bid for Foster’s.

Earlier, global beer giant SABMiller launched a cash bid for the Australian brewer valued at A$9.5 billion ($10.1 billion), excluding debt, which Foster’s rejected. Investors predicted Foster’s would eventually succumb to a higher offer.

Analysts said the family-controlled Heineken did not have the firepower to mount a counter bid after its joint cash takeover of Scottish & Newcastle in 2008 and last year’s all-share acquisition of Mexico’s FEMSA Cerveza.

“S&N made sense because it was predominantly a mature market deal but it reinforced our position in Europe with a nice add-on in India, but the biggest part of that acquisition was Europe ... reinforcing our leadership in Europe," Hooft Graafland said.

The group, which brews around a tenth of the world’s beer and ranks behind Anheuser-Busch InBev and SABMiller, is increasingly looking at growing emerging markets, cost cutting especially in Europe and bolt-on brewing acquisitions.

Heineken’s three biggest markets are now Mexico, Nigeria and Russia and it earns nearly half of its profits from emerging markets, diluting its reliance on tough Western Europe beer markets. Heineken is No 1 in Britain, Italy and the Netherlands.

“The emerging parts will grow faster than the mature markets so over time you will get more out of emerging markets. At the same time you see that the risk profile of a number of these emerging markets is becoming less risky," Hooft Graafland said.

Heineken shares were off 0.6% at €47.18 by 1210 GMT. SABMiller was down 3.1% at £21.14.