Shareholders in Australian drinks giant Foster's today voted in favour of a long-awaited plan to split its beer and wine businesses, which has been hit by a grape glut and soaring local dollar.
Investors voted overwhelmingly in favour of the demerger, which will see a new company, Treasury Wine Estates, listed alongside Foster's on the Australian Securities Exchange.
Foster's, which owns Australia's largest brewer Carlton and United Breweries (CUB) and whose wine portfolio includes brands Wolf Blass, Penfolds and Rosemount, had argued the demerger was in shareholders' best interests.
Addressing investors ahead of the vote, Foster's chairman David Crawford said the demerger recognised 'the different business characteristics and industry dynamics faced by each business'.
Foster's wine labels have endured a glut of production in Australia, while the soaring Australian dollar - now at historic highs against the US dollar - has made exports more expensive for foreign customers.
On the beer side, the company has battled intense competition, affecting its flagship brands VB, Crown and Carlton Draught with the domestic market shrinking an estimated 7% in the second half of 2010.
Crawford said the demerger would maximise long-term value for investors better than a possible sale of the wine business - an option considered by the board in 2010 before it rejected a private equity firm's offer of up to Aus$2.7 billion (US$2.9 billion) for its wine assets.
Under the demerger plan, investors will retain their Foster's shares, and will also gain one share in Treasury Wine Estates for every three Foster's stock they own. In February,
Foster's reported first-half net profit of $312.1m, down from $355.7m a year earlier.
