E-Malt.com News article: Australia: Foster’s appoints Ian Johnston as CEO amid speculations of a prepared takeover or break-up of wine and beer operations

The Australian Foster’s Group has appointed Ian Johnston as CEO, the company announced on September, 26.

Mr Johnston, a director of Foster's, stepped in as the acting CEO in July following the exit of Trevor O'Hoy after a profit warning that forced a review of the group's troubled wine business.

Meanwhile, Deutsche Bank revealed it had built up a 5.3 per cent stake in the brewing company, the Australian communicated on September, 26.

The timing of the announcements sparked speculation Foster's could be preparing for a takeover battle. However, a person familiar with the situation said Mr Johnston's appointment was in train prior to Deutsche Bank's disclosure and a short-list of internal and external candidates had been made.

But with rumours Deutsche Bank had been accumulating shares for some weeks, it was a likely factor in chairman David Crawford's decision.

The Australian brewer had previously said an appointment would be made before the end of 2008. However, finding a chief executive while conducting a review may create a potential quandary, experts comment.

Deutsche Bank's disclosure was made to the Australian Stock Exchange after the close of trade on September, 25. The majority of the stock was acquired in relation to lending arrangements and stock borrowing for clients.

Under ASX rules, shareholders must disclose stakes once they exceed 5 per cent.

"The market thinks Deutsche has bought for an overseas corporate," said a senior institutional trader at a major broker.

A second trader said: "Not many hedge funds I know buy 100 million shares on a swap book."

Foster's beer assets are likely to attract the attention of global brewers including SABMiller, which already has a local brewing JV with Coca-Cola Amatil, and Heineken, but analysts have said its wine business offers less appeal.

After hitting a four-year low mid-July, shares in Foster's have gained more than 30 per cent, while the S&P/ASX 200 has risen just 3 per cent over the same period.

"It's a classic candidate for a strategic break-up of its beer and wine operations and that's been speculated for some time," White Funds Management portfolio manager Angus Gluskie said.

"It's rallied reasonably strongly the last few months on the back of this type of thought. But Deutsche's reasons may be long-term, they - or whoever they're acting for - may have no immediate intent to do anything."

Foster's had initiated an international search to find a replacement for Trevor O'Hoy.

Foster’s chairman David Crawford said: “We have been absolutely clear and consistent that we would appoint the best person to lead the company, and have conducted a rigorous international search to this end.”

“Having initially intended to return to his non-executive role, Ian recently indicated his availability to take on the CEO appointment.

“Ian's mix of skills and experience, combined with the positive impact he has made over the past few months, convinced the board that he was ideal for the role.”


26 September, 2008