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Australia's Foster's Will Sell Its Wine Club Units

Foster's Group, the world's second-biggest wine company, said on Thursday it had agreed to sell its wine club businesses in Australia, New Zealand and Japan to private equity firm Archer Capital.

Foster's did not disclose the sale price but said gross proceeds from the deal and the recent sale of other parts of its Wine Clubs and Services Group would be about A$270 million (US$227 million) this financial year.

Foster's said it expects to recover book value from the sales of the direct-mail wine club businesses.

Foster's Chief Executive Trevor O'Hoy said proceeds of the sale will be used to reduce debt and put towards the recently completed A$400 million off-market share buyback.

The proceeds of the sale appear to exceed expectations of analysts, who said the businesses could fetch up to A$250 million.

Foster's said strong demand for the individual businesses outweighed interest in the combined wine clubs and services group.

It said "in the past few weeks" it had sold Cellarmaster Wines Europe to an affiliate of private equity firm ABN AMRO Capital, and International Wine Accessories in the United States to affiliates of Girard Winery.

The company said the sales accounted for the "vast majority" of the wine clubs business, adding that interest in the remaining European services business was strong.

The sale was flagged in August last year as part of the company's plan to shift from a diversified portfolio of businesses to become an integrated global drinks producer.

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