By Ian Verrender
There's nothing like a market meltdown to focus the mind.
While it delivers a certain latitude to a host of companies seeking to camouflage an ordinary performance, it can leave those already under attack horribly exposed.
Exposed is precisely how Foster's boss John Pollaers and his board, led by David Crawford, must now feel.
Global brewing giant SABMiller, to the surprise of no one, has turned its friendly overtures into a hostile attack. The only question now remaining about the future of the once-Aussie-based global giant is not ''if or when'' it will fall, but for ''how much''.
When the London-based but South African-born SABMiller first knocked on the Foster's door back in June, it took less than 24 hours for Crawford and Pollaers to reject the offer. In fact, the words ''ridiculously low'' were bandied about along with analysts' predictions the foreign interloper would need to up the ante to as much as $5.50 to win the day.
Full marks for bravado. Unfortunately, the brewer of Bazza McKenzie's favourite tipple had been trading around $4.30 just prior to the offer and its recent performance did little to instil any great confidence of a sudden earnings surge that could justify a higher price.
It has been clear the South Africans have spent the intervening weeks marshalling the funds for a hostile offer with variously detailed reports of a multibillion-dollar syndicated loan.
But while it was thought the onslaught was scheduled to coincide with what many believed would be a lacklustre earnings performance from Foster's next Tuesday, it seems the South Africans have decided it would be best to capitalise on the sudden dive in Foster's share price.
As global markets tanked last week, Foster's dived below $4.70 and, while it since has recovered to slightly above the $4.90 bid price, that performance has provided SABMiller with the ammunition to argue that Foster's would have been well under water without the takeover threat.
On top of all that, a recent survey by Nielsen has confirmed the ongoing decline of Victoria Bitter, the group's biggest seller, a factor that probably would contribute to fairly flat earnings at next week's announcement.
In the 12 months to June, VB sales dropped to 13.5 per cent of the national beer market, down from 14.3 per cent a year earlier.
And the company's overall performance has also resumed its long-term trend, which unfortunately is downwards. Foster's overall market share slipped marginally in the financial year to 48.71 per cent from 48.77 per cent previously.
That may sound insignificant. But in the half-year results, Pollaers outlined what appeared to be a turnaround in sales volumes. Foster's actually gained market share between October and December.
A closer look at the numbers, however, revealed that the company had sacrificed value for volume and, while he denied there had been any discounting, Pollaers admitted the group had sold more product ''on promotion'' than had usually been the case - a strategy many believed smelt an awful lot like discounting.
It was telling that, since the ''promotions'' had ceased, the Nielsen numbers show Foster's share of the national market again had gone into decline, slipping to 47.36 per cent in the June quarter.
The newly liberated Foster's - which finally cast aside its wine division anchor in May - has long been touted as a target. In fact, the wine demerger was explicitly designed to deliver long-suffering shareholders some relief by essentially hanging a ''For Sale'' sign on both the beer and wine operations.
While the South Africans obviously will argue that the offer is fully priced and that a takeover premium was built into the share price even before they knocked on the door, it stands to reason that they haven't opened the firefight with all the weaponry at their disposal.
So a sweetened bid almost certainly is on the cards.
But they clearly have might on their side - and an almost total dearth of opponents - as they appear at this stage to be the only truly natural acquirer.
Unlike some rivals, SABMiller is content to run strong regional brands for regional markets. Foster's certainly fits that bill, seeing as it has almost half the Australian market.
Japanese brewer Asahi is said to lack sufficient balance-sheet power to muster the necessary readies for a Foster's tilt while Diageo - where Pollaers once worked - has a global brands and distribution strategy.
The other possibility, AB InBev, is still digesting its huge takeover of Anheuser-Busch while Grupo Modelo, the Mexican-based producer of Corona, seems to have abandoned its ambitions to team with Foster's.
Meanwhile, should Foster's bang the drum and try to lure in a rival, potential suitors would blanch at the cost, given the strength of the Australian dollar and the turmoil on credit markets.
As a nation, we are world-champion beer drinkers and for a time, back in the '80s, it looked as though that Aussie ''can-do'' attitude when it comes to consuming the amber fluid might translate into dominating global production.
Foster's once had breweries spanning the globe with operations in the UK, America and China. Unfortunately, it was a castle built on sand - and a mountain of debt, which was unwound too cheaply, the proceeds from which were then squandered on an ill-considered and hugely expensive expansion into wine.
Now it has come to this. It's enough to make Bazza McKenzie, Australia's unofficial cultural attache and Foster's aficionado, break into a rendition of his classic, Chunder in the Old Pacific Sea.