Australia's biggest brewer Foster's Group Ltd. said Tuesday it has rejected a $10 billion cash takeover offer from beer-maker SABMiller PLC as too low.
Foster's announcement came after beverages group Coca-Cola Amatil Ltd. amended the terms of a brewing joint venture with SABMiller, which enabled SABMiller to make its 9.5 billion Australian dollars ($10 billion) bid for Foster's.
London-based SABMiller, the world's second-biggest brewer by volume, is offering AU$4.90 a share in cash for Foster's _ an 8 percent premium on Foster's share price before the offer.
"The board of Foster's believes that the proposal significantly undervalues the company," Melbourne-based Foster's said in a statement.
After the statement, Foster's shares jumped 13 percent on the Australian stock market to AU$5.12, its highest price since February 2007.
SABMiller said Foster's was attractive because it was Australia's leading brewer with seven of the top 10 beer brands, and buying the company was consistent with its strategy to spread globally.
Australia is an attractive market because of its population growth and economic connections to Asia, London-based SABMiller said.
SABMiller said it had a proven track record of integrating brewing companies and improving the performance of those businesses.
"We continue to believe that the proposal price is attractive and offers good value to Foster's shareholders," SABMiller chief executive Graham Mackay said in a statement.
The company would seek discussions with Foster's board, MacKay said.
There has been much speculation that Foster's would become a takeover target of one of the global brewing giants, after Foster's put its poorly performing wine businesses into a separately listed company in May.
Market analyst Peter Esho said other global brewers would be running the numbers on Foster's after its rejection of SABMiller's bid.
"If Foster's thinks the deal is undervalued, it needs to really convince the market that 2012 estimates for net profit of AU$933 million are too low," Esho said. "Until then, SABMiller can sit in the box seat and play its hand."