Fosters Says Cant Explain Surge in Share Price (Update2) By...

Fosters Says Cant Explain Surge in Share Price (Update2)

By Robert Fenner

Nov. 24 (Bloomberg) -- Foster's Group Ltd., Australia's biggest beer and winemaker, said it can't explain a surge in its share price that sent the stock to a record yesterday.

``Aside from information already publicly released, the company is not aware of any other explanation,'' Melbourne-based Foster's said in a statement to the Australian Stock Exchange today. The company is also the world's second-largest winemaker.

Foster's shares closed at A$6.80 yesterday on speculation the company may become a takeover target of buyout funds or overseas beer makers. Inbev NV, the maker of Beck's beer, is currently considering a bid, the Herald Sun newspaper reported yesterday, without identifying sources.

``We cannot definitively rule out a takeover of Foster's, however we believe that a bid is relatively unlikely in the short term,'' analysts at Macquarie Equities said in a note to clients. ``While Foster's beer division could arguably be an attraction -- although its size and growth profile is not compelling on a world stage -- we believe that the wine exposure would act as a strong deterrent.''

Foster's shares fell 8 cents, or 1.2 percent, to A$6.72 at 10:20 a.m. in Sydney, giving it a market value of A$13.6 billion ($11 billion). The stock rose 4.1 percent yesterday with almost 13 million shares traded, more than double the daily average of the past six months.

Following Qantas

The shares have gained 25 percent since Aug. 29, when the Sydney Morning Herald reported that SABMiller Plc, the London- based maker of Miller Lite, and Leuven, Belgium-based InBev were planning bids.

Yesterday's surge came a day after Qantas Airways Ltd., Australia's biggest airline, said it received a takeover approach from Macquarie Bank Ltd. and Texas Pacific Group.

``What happened to Qantas is pushing rumors around the market, so those chasing short-term returns are jumping on those stocks that have been speculated on,'' said Greg Canavan, an analyst at Fat Prophets in Sydney, who rates Foster's ``hold.''

Foster's has about 55 percent of Australia's beer market compared with 41 percent for Lion Nathan Ltd.