Limited Room For Cost Savings Suggests Fosters Stalemate Could Persist

Australian alcoholic drinks producer Foster's Group and UK brewing giant SABMiller remain stuck in stalemate after Foster's rejected SABMiller's takeover offer of AUD9.5bn (US$10bn). In a previous article (see 'Shortage Of Interested Parties Could Let SABMiller Pick Up Foster's On The Cheap', June 21), we put out a view that SABMiller is unlikely to pull out all the stops to land Foster's and will only remain interested in the Australian company if the price is reasonable. With Foster's already boasting one of the highest margins among major brewers, it could be difficult for SABMiller to generate additional cost savings to justify a higher valuation.

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