Australian brewer Foster's rejected a $10 billion offer from rival SABMiller for the second time as shareholders hold out for a better offer from the global brewing giant.

SABMiller announced on Wednesday it would go directly to shareholders to gain about half of Australia's beer market, with a repeated offer of A$4.90 a share.

Foster's on Thursday said the offer significantly undervalues the company. Shares in the brewer, which is expected to report flagging profits on Tuesday, rose as high as A$5.03 on Thursday.

They are doing the right thing. They probably will get a better price sometime down the track and this strategy is probably the right one, said Craig Young, portfolio manager at Tyndall Investment Management, which owns Foster's shares.

The market thinks that a better price will be forthcoming. It expects something above A$5 and decently above A$5. So you're talking A$5.10, A$5.20, maybe even as high as A$5.30, he said.

The stock has gone as high as A$5.25 since SABMiller's first offer in June.

SABMiller, which makes Peroni, Grolsch and Miller Lite, has long been seen as the favorite to take over Foster's since rivals such as Heineken are struggling with debt or lack adequate funding.

Foster's boasts high margins and a dominant position in Australia, although beer volumes have sagged recently with a poor summer and consumer downturn.

SABMiller could have strengthened its hand by waiting longer to make a direct offer in the absence of a rival, shareholders said, signaling an improved bid may emerge.

It doesn't look like there is anyone at all else out there to buy it. It certainly looks like they want the deal done fairly quickly so I would have thought a better price will be forthcoming, said Young.

They do want the asset, just by the fact the market's gone down (since the June offer) and they still offered a similar price. They could have waited six months. It would have put them in a better bargaining position, but they obviously want to get the deal done quickly and they are not as fussed on price, Young said.

World brewers, juggling rising raw materials prices and slowing growth in mature markets, are seeking growth elsewhere and a number of smaller brewers are expected to be swallowed up.

On Thursday, Asahi Group Holdings <2502.T> said it will buy New Zealand beverage group Independent Liquor for 97.6 billion yen ($1.27 billion), as the Japanese brewer rushes to develop profit growth drivers outside its shrinking home market.

Foster's, which rejected the A$4.90 offer in June and has refused to engage in talks with its suitor, said after its board met early on Thursday morning that the latest offer significantly undervalues the company.

It probably puts a bit more pressure on Foster's management because they are certainly going to get questioned a lot harder on...their strategy and why they see value well above A$4.90, said Jason Beddow, chief executive at Foster's shareholder, ARGO Investments. He added that he would not take the offer at this stage.

The cash offer, which will be reduced by any second-half dividend paid by Foster's, requires 90 percent acceptance by shareholders.

Foster's releases its full-year earnings on Tuesday. The brewer's advisors on the deal are Goldman Sachs, Gresham and Allens Arthur Robinson.

($1 = 0.953 Australian dollars)

(Reporting by Miranda Maxwell; Editing by Ed Davies, Balazs Koranyi and Matt Driskill)