Molson Coors takes interest in Foster's

By Simone Giuliani

MELBOURNE (Reuters) - North American brewer Molson Coors Brewing Co (TAP.N: Quote) TAP.TO has emerged as holder of a 5 percent stake in Australian brewer Foster's Group Ltd (FGL.AX: Quote), giving it a seat at the bar amid persistent takeover talk.

Australia's largest brewer is due to decide early next year on what to do with its troubled wine unit, which ranks globally behind Constellation Brands Inc (STZ.N: Quote). If its beer operations become a stand-alone business, analysts said they could be worth at least A$10 billion ($7 billion) to another brewer.

Foster's has already appointed advisers on a defense as investors speculate that global brewers would be interested in its high-margin beer operation in Australia, where it has about half the market with domestic brands such as Victoria Bitter.

The global beer market is consolidating, with a closing date approaching for InBev NV's INTB.BR $52 billion takeover of Anheuser-Busch Cos Inc (BUD.N: Quote), a debt-financed deal to create the world's largest brewer.

A takeover of Foster's beer assets by Molson Coors, the maker of Coors Light and Molson Canadian Beer, is considered less likely than a joint bid involving Molson Coors and its larger U.S. joint-venture partner, SABMiller Plc (SAB.L: Quote), analysts said.

Foster's beer assets are valued at about as much as Molson's entire market value of around $7.7 billion.

"It's a big bite for them (Molson Coors) and it's hard to see how they could do it," said Craig Young, portfolio manager at Tyndall Investment Management.

But some analysts warmed to the prospect of a joint venture bid involving Molson Coors, SABMiller and perhaps also Australian soft drinks group Coca-Cola Amatil (CCL.AX: Quote), which also has a local venture with SABMiller.