Foster's Group, Australia's biggest brewer, has rejected as too cheap an offer of up to $2.5-billion for its wine business but the approach could flush out offers for the entire group.

The bid, by an unidentified private equity company, for the world's second-largest wine business drove Foster's shares 6% higher. Investors speculated that suitors for the combined group, which has a market value of about $11-billion, might now step forward.

"This puts the whole company in play. If you are one of the big brewers, you probably didn't want to be saddled with a wine business you didn't understand or want," said Tom Elliott, managing director of hedge fund MM&E Capital.

"Now that you know there are potential buyers out there, you can make a bid for the whole company knowing that you can off-load the wine business to private equity or someone else," he said.

Foster's said yesterday it would continue to work on splitting its ailing wine business from the beer unit. Sales of Foster's wine, including Beringer, Penfolds and Wolf Blass, have been hit by a deep US recession and a trend away from low-end, bulk wines in Australia.

The strong Australian dollar has also been a drag, slashing US earnings.

Foster's shares closed 4.5% higher at A$6.34 on volume, almost four times its average of the past 30 days in a broader market, 0.8% down.

They spiked late last month after sources said brewing groups SABMiller and Japan's Asahi Breweries were looking at the company's beer operations, valued at more than $10-billion, but no firm bids emerged.

The wine business, known as Treasury Wine Estates, is valued at A$3.1-billion on Foster's books, or about half what the company spent on wine acquisitions in a rapid expansion as it sought to offset flat demand for beer.

Foster's spent more than A$6-billion building its wine business, which ranks behind Constellation Brands, after acquiring California's Beringer Wine Estates in 2000 and Australia's Southcorp in 2005.

Analysts value the business at A$1.7-billion to A$3.5-billion.

Foster's began in the 1880s, when the first Foster's lager was brewed, becoming one of Australian's top brands.