SABMiller's Buy Of Foster's Would Benefit Both, Moody's Says

Global brewing giant SABMiller PLC's (SAB.JO SBMRY) proposed $9.98 billion (A$9.51 billion) cash offer for Australian peer Foster's Group Ltd. (FGL.AU) would boost both companies' profits and scale up their businesses if a deal is completed, Moody's Investors Service said Monday.

SABMiller--the second-biggest global brewer by volume after Anheuser-Busch InBev NV (ABI.BT)--has a good track record in sector acquisition plays, Moody's said in a report.

The transaction would allow SABMiller to gain access to cash-rich assets, assist its cost savings drive and reduce its reliance on growth from developing markets, Moody's said, while Foster's would benefit from being part of a materially larger company with extended reach.

"If the acquisition proceeds, it would be credit positive for both companies with expected benefits in terms of diversification, scale and cost savings," Moody's analysts Yasmina Serghini-Douvin and Maurice O'Connell said in the report.

Moody's rates SABMiller at Baa1, with Foster's at Baa2.

Last week, SABMiller, maker of Miller Lite, Grolsch and Peroni Nastro Azzuro, said it will continue to pursue a multi-billion dollar takeover of Foster's, as the U.K.-based group bids to ramp up its presence in mature world beer markets.

While downplaying talk of a major shift in its focus, SABMiller is keen to extend its proportional reach out of the fast-growing emerging markets, which bring in 80% of its profits compared with about 50% at its rivals, by building its position in developed economies.

It also expects Australia's growing economy to continue to benefit from booming growth in Asia, where rising incomes and a thirst for a Western lifestyle are fuelling demand for consumer products.

SABMiller's offer proposal for Foster's, swiftly rejected by the Melbourne-based beer maker, is the first big acquisition play in the brewing industry since the Netherland's Heineken (HEIA.AE) bought Mexican brewer FEMSA early last year and follows a trend of global consolidation in the beer business.

At 1024 GMT, SABMiller shares were up 27 pence, or 1.26%, at 2123 pence, in a higher London market.

-By Simon Zekaria, Dow Jones Newswires; [phone]; [e-mail]