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Long-running interest in the Australian brewers beer business resurfaced on Monday after Britains Sunday Times reported that SABMiller was considering buying the unit.

Fund managers are divided over whether a suitor would emerge before Australias largest brewer formally splits off the wine division in 2011 or wait, with complex debt and structural issues to be resolved.

Fosters has one of the highest-margin brewing operations in the world with brands including Fosters Lager, Victoria Bitter and Pure Blonde.

Analysts say Fosters beer business is an attractive target for drinks firms such as Molson Coors TAP.N, which owns a 5 percent stake in Fosters, and Coca-Cola Amatil CCL.AX.

SAB and Asahi are the two names that keep popping up and given the demerger process in train you would expect people who ever thought they might look at Fosters to get teams together to do so, said one source familiar with the situation. He declined to be named as he was not authorized to speak to the media.

Another source said Asahi, Japans No.2 brewer after Kirin Holdings 2503.T, remained interested. Nomura and Rothschild are advising Asahi on this. Asahi declined comment.

Fosters said in May it would split the beer unit from its ailing wine business, putting Fosters beer operations at the center of takeover talk in the drinks sector.

A takeover of Fosters beer would be the second largest takeover deal in the global food and drinks sector this year, according to Thomson Reuters data.

The takeover talk pushed Fosters shares up more than 6 percent to their highest level in more than two years, with volume 3.0 times the daily average over the past 30 days.

By 0500 GMT 1 a.m. EDT, the shares were up 6.2 percent at A$6.18.

SUITORS GATHER

A number of potential suitors including SABMiller and Asahi have been looking at the business since Fosters announcement to split its beer and wine operations, two sources said, adding neither had formally decided whether to make an offer.

Fund managers are divided over whether a suitor would emerge before Fosters formally splits off the wine vision in 2011 or wait, with complex debt and structural issues to be resolved.

Responding to media reports, Fosters said on Monday it was not aware of any unannounced information driving the stock.

Analysts value Fosters at around 13 times forward earnings. However, most of the companys value is locked into the beer operations following a string of writedowns on its underperforming wine business.

It a takeover is probably not too likely in the near future but once separation happens there will be some definite interest, said Daniel Nelson, investment analyst at Constellation Capital, which owns Fosters shares said.

From a margin perspective it is a very profitable market and the cash could be used to fund some of the developing market aspirations.

Sydney-based Gresham Advisory Partners is advising Fosters.

The Australian newspaper reported on Monday that SABMiller had hired JPMorgan and Royal Bank of Scotland as advisers for a potential bid but no decision had been made.

SABMiller owns the brewing rights to Fosters in the United States.

Asahi President Naoki Izumiya said this month he expects to have $9.2 billion for acquisitions over the next five years, with eyes on Asia and Oceania.

Japanese brewers have been scrambling to diversify, mainly by overseas acquisitions, to cut their reliance on the local beer market, which has lost 15 percent in volume in the past decade due to a sputtering economy and shrinking population.

SABMiller, the maker of Peroni and Miller Lite, generates about 85 percent of its profits from the emerging markets of Latin America, Africa and Asia.

Coca-Cola Amatil which has an Australian joint venture with SABMiller, was also a likely predator, analysts say.

$1=.6431 Pound

Writing by Dhara Ranasinghe; Additional reporting by James Topham in Tokyo; Editing by Anshuman Daga