The move, which is subject to shareholder approval in April and the Supreme Court of Victoria, will see the creation of two listed entities, Treasury Wine Estates and Foster’s Group.
According to Foster’s, the scheme - which will see its wine business separated from its beer, cider and spirits portfolio - is set to be complete by May 2011.
Foster’s chairman David Crawford said: “Foster’s 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 Foster’s shareholders.”
As part of the structural separation, independent boards and managements will be created to “enhanced focus for each entity”.
Foster’s added that the demerger will bring independent capital structures and financial policies, greater flexibility, increased transparency and improved investment choice for shareholders.
Foster’s chief executive Ian Johnston said: “We expect this will lead to improved performance by the businesses over time.”
Eligible shareholders will retain their existing Foster’s shares, and receive one Treasury Wine Estates share for every three Foster’s shares.
Mr Crawford added: “The demerger will allow Foster’s shareholders to benefit from owning Treasury Wine Estates shares and to participate in any value creation within that business including from improved market conditions in the wine category.”
‘One-off transaction costs’ associated with the demerger of approximately AU$151m (pre tax) will be incurred by Foster’s.
The pre-tax cost includes, transfer costs and advisory fees of AU$66m, foreign exchange derivatives of AU$26m, IT expenditure of AU$41 and restructuring costs of AU$18m.