Foster8217;s to split wine,beer divisions

Australian drinks giant Foster's said it planned to split its wine and beer divisions in a long-awaited move.

Australian drinks giant Foster8217;s said it planned to split its wine and beer divisions in a long-awaited move that is likely to draw takeover offers as the bloated industry consolidates.

Foster8217;s,owner of Australia8217;s largest brewer Carlton and United Breweries,also said half-year profits were down 12 per cent as domestic beer sales slumped,especially in the flood-hit state of Queensland.

Foster8217;s reported first-half net profit of Aus dollars 312.1 million USD 313.0 million,down from Aus dollars 355.7 million a year earlier.

The demerger,first proposed last May,will result in a new company,Treasury Wine Estates,being listed alongside Foster8217;s on the Australian stock exchange.

Foster8217;s shares were flat at Aus dollars 5.74 at 12:00 pm 0630IST.

8220;Fosters has completed a detailed evaluation of the issues,costs and benefits of the demerger,and the board unanimously considers that the demerger represents the best path forward and is in the best interests of Foster8217;s shareholders,8221; chairman David Crawford said.

8220;The board has formed the view that further benefits will result from a complete separation and now is the right time to pursue a demerger of Treasury Wine Estates from Foster8217;s,8221; he added.

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Foster8217;s,whose wine labels include Wolf Blass and Penfolds,has been hit by a glut of production in Australia,while the soaring local dollar has made exports more expensive for foreign customers.

Last year,chief executive Ian Johnston said a quarter of Australia8217;s vines should be destroyed to reduce the oversupply.

Meanwhile the company is battling intense competition in the beer industry,affecting its flagship brands VB,Crown and Carlton Draught.

Foster8217;s estimated the domestic beer market shrank 7.0 percent in the second half of 2011.

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Foster8217;s is likely to field new bids after the demerger is completed in May,subject to shareholder and court approval.

In September,it rejected a private equity firm8217;s offer worth up to Aus dollars 2.7 billion for its wine assets,but said it would consider other bids.

Under the demerger,shareholders will receive one Treasury Wine Estates share for every three Foster8217;s shares,while retaining the Foster8217;s shares.