Foster's has been the subject of takeover talks since it split its beer and wine business Brewing giant SABMiller has agreed to buy Foster's in a deal that values Australia's largest brewer at 9.9bn Australian dollars ($10.2bn; £6.5bn).Fosters had rejected SAB's previous bid worth A$9.5bn, saying it undervalued the company.
However, the Foster's board said it would be recommending the latest offer to its shareholders.
If accepted, SAB, whose brands include Grolsch and Peroni, expects to complete the deal by the end of the year.
Shareholders should receive the offer documents in about six weeks, the brewer said.
The proposal allows for Foster's to walk away from the deal for A$99m if a higher bid is accepted and completed within 12 months.
'Outstanding portfolio'SAB said the deal would give it access to Australia's "strong economic growth prospects", as well as the country's "stable and profitable" beer industry.
"We look forward to working with Foster's employees and other stakeholders to ensure the success of Foster's in the future as the largest brewer in Australia with an outstanding portfolio of brands," said SAB's chief executive Graham Mackay.
The agreed offer values Foster's shares at A$5.10, compared with the original offer of A$4.90 a share made in June.
There have been talks of a takeover of Foster's since it announced plans to break itself into two parts last year.
The brewer spun-off its troubled wine business, which had been seen as deterring potential suitors.
Any purchase of Foster's by SAB will not include the Foster's lager brand in the UK and Europe, where it is owned by Heineken.
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