The Australian brewing and winemaking group Foster's is considering a bid for Southcorp, Australia's third biggest wine group, according to reports.
The rumours began circulating after Foster's said it might sell its pubs and gaming rooms - a move that could give it a cash pile of A$1.1bn ($726m;£437m).
Market watchers immediately began suggesting the group was raising funds for an acquisition, with the struggling Southcorp the most likely target.
News on Tuesday that Southcorp's chief executive Keith Lambert had been forced to resign only served to fuel the rumours.
Other possible purchases include the US winemakers Kendall-Jackson, producer of the Vintner's Reserve brand, or the Robert Mondavi group.
Risky move?
Shares in Southcorp, whose brands include Penfolds, Lindemans, Rosemount and Wynns Coonawarra Estate, jumped 9% on the speculation.
Analysts said the winemaker's recent poor performance could make some dealers question a bid, but pointed to Southcorp's strong portfolio for longer term potential.
"It has good distribution. All it needs is more volume to pump down those distribution channels and Southcorp's brands are internationally well-known," said Scott Marshall, an analyst at Shaw Stockbroking.
Southcorp shares tumbled to a seven year low last month after it warned that it would make a loss and not pay a dividend for the financial year 2002-2003 because of a failed sales promotion in Britain.
It has downgraded its earnings forecasts twice in less than a year.
Ask the boss
A takeover would depend on Southcorp's founding Oatley family, who still own 19% of the company but who would be selling at a loss if the shares were bought around their current level of about A$2.85.
There might also be competition issues from any deal, with a union of Foster's and Southcorp's wine businesses commanding a large chunk of the market.
Foster's has refused to comment on the renewed speculation but analysts are eagerly awaiting the group's half year results presentation next week.
Chief executive Ted Kunkel is expected to comment on wine industry consolidation and answer questions on his comments last year that Foster's was looking for acquisitions worth up to $100m.
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