Seagram Forges Alliance With Foster's in Australia and New Zealand.

NEW YORK/MELBOURNE--(BUSINESS WIRE)--October 31/November 1, 1999--

The Seagram Spirits And Wine Group has announced today the formation of a strategic alliance between The Seagram Company Ltd. and Carlton & United Breweries (CUB), a wholly-owned subsidiary of Foster's Brewing Group. This landmark agreement is designed to build scale and provide further growth opportunities for both parties in Australia and New Zealand.

Under the terms of this agreement, CUB, through its acquisition of Seagram Australia Pty. Limited and certain Seagram assets in New Zealand, has purchased Seagram's strong line-up of local spirits brands in Australia and New Zealand, including production, inventory and distribution. These brands include: The Black Douglas Scotch Whisky; Cougar Bourbon; Coyote Tequila; Karloff Vodka; Wilson's Whisky; Akropolis Oyzo, and Seagram's Liqueurs.

Through the agreement, CUB will also bottle and distribute in Australia and New Zealand select international Seagram brands - Captain Morgan Rum, Seagram's Extra Dry Gin, and 100 Pipers Scotch Whisky - as well as Chatelle Brandy, which is jointly owned by Seagram and Camus SA. Additionally, CUB will distribute in these markets Seagram's imported international brands including Chivas Regal and Royal Salute Scotch Whiskies, Martell Cognac, and Sandeman Ports, as well as ABSOLUT VODKA for V&S Vin & Sprit AB.

The new business will trade as The Continental Spirits Company Pty Ltd within the CUB umbrella, offering an unrivalled portfolio of category leaders in the marketplace.

The agreement is valued at A$87 million (US$56m). Further terms were not disclosed.

Steven J. Kalagher, President & CEO, The Seagram Spirits And Wine Group, commented, "This strategic alliance is an important step on the way to achieving our vision, as we continue to focus and prioritize our investment and efforts behind spirits and wine categories and markets that deliver sustainable profitable growth. We are delighted to have reached such a constructive and mutually beneficial agreement with Carlton & United Breweries, one of the largest brewers in the world and sister division to Foster's wine business, Mildara Blass, whose quality Australian wines Seagram is proud to distribute in the U.K."

Mr Kalagher noted, "Seagram already leads the way in Australia and New Zealand with 10 key brands, embracing the Scotch, Bourbon, Vodka and `Ready to Drink' categories. By combining this strong brand footprint with Carlton & United Breweries' considerable distribution scale, we are creating a powerful `win win' position which provides both parties with exciting growth opportunities."

"The Seagram alliance is a natural extension of our company's positioning as Australia's premium beverage company," Foster's CEO and President, Mr Ted Kunkel, said. "Brand leaders such as these will immediately strengthen our total market offering in beer, wine and spirits. At the same time, we expect the deal to be earnings-per-share positive from day one and generate rates of return in excess of the cost of capital within three years."

The Seagram Spirits And Wine Group has responsibility for all production, brand management and marketing, sales and distribution of The Seagram Company Ltd.'s beverage alcohol brands throughout more than 190 countries and territories. The Group produces and markets such brands as Chivas Regal, Royal Salute and The Glenlivet Scotch Whiskies, Crown Royal and Seagram's V.O. Canadian Whiskies, Captain Morgan Rum, Seagram's 7 Crown American Whiskey, Four Roses Bourbon, Don Julio Tequila, Seagram's Extra Dry Gin, Martell Cognacs, Sandeman Ports and Sherries, and Sterling Vineyards Wines. The Group distributes ABSOLUT VODKA in the U.S. and major international markets and Mumm and Perrier-Jouet Champagnes in international markets.

CUB is Australia's leading brewer, producing more than half the nation's beer as well as a range of innovative adult beverages. It is the market leader in the premium, low-alcohol, full-strength and imported beer market segments. CUB is also a major participant in the Australian leisure and entertainment market through its Australian Leisure and Hospitality Group which owns and operates hotels and liquor retail outlets throughout Australia.