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Analyst predicts big job losses at Foster's

Published:  23 July, 2008

Foster's Group (FGL) will be forced to make 400 redundancies in its US and UK sales forces in order to meet optimistic synergy targets following its takeover of Southcorp, according to a new report from broker Credit Suisse First Boston (CSFB).

SFB also reduced its valuation of the company from A$6 to A$5.60 after being able to identify only A$111 million in gross synergies. Southcorp said in a statement shortly before it succumbed to Foster's overtures that the potential synergies totalled at least A$160 million.

As well as the US and UK job losses among its front line sales force', CSFB said Foster's would have to close at least three wineries, losing about 100 positions, and close up to five warehouses.

On the revenue side, CSFB was more optimistic, predicting good growth and adding that Foster's would be unlikely to see the same revenue erosion' suffered by Southcorp when it merged with Rosemount.

Goldman Sachs, in a briefing note to clients, was also positive about FGL's future revenues, particularly in the US market.