Bouquet of battle uncorked as Oyster Bay bid gets trumped

The battle for control of Oyster Bay Marlborough Vineyards broke out into the open yesterday with Delegat's Wine Estate saying it would trump the bid made by Marlborough businessman Peter Yealands.

Cornerstone shareholder Delegat's said it would offer $3.20 cash a share in an attempt to raise its existing 32.58 per cent stake to 50.1 per cent.

Last month, Peter Yealands Investments offered $3.10 a share for a minimum of four million shares in an attempt to raise its 6.7 per cent stake to 51.1 per cent. Yealands' offer closes on July 29.

Managing director Jim Delegat said the offer was being made because the company felt Yealands' offer was not in the interests of Oyster Bay or its shareholders. Delegat's formed Oyster Bay in 1999 and is contracted to buy all the grapes produced on the estate for at least 20 years.

"Yealands may decide to dominate the board, bring a change in the vision and philosophy of the company. We have made an offer in response in order to preserve the current and future direction of Oyster Bay Marlborough Vineyards," Delegat said.

Yealands said he was not surprised by Delegat's counter offer but could not understand why the winemaker was making it.

"It's not as if Oyster Bay has been paying a good dividend," said Yealands.

"They [Delegat's] have got security over the contracts so I'm a bit mystified as to why they would want to go this way."

"I will talk to my advisers and reflect on it."

Oyster Bay posted a $1.2 million profit in the year to June 30, 2004, versus a loss of $380,000 in 2003, and paid a maiden dividend of 13c a share.

Delegat said the liquidity of Oyster Bay's shares would be greatly diminished and many of the company's 750 shareholders would be left with a marginal holding if Yealands' bid succeeded.

Furthermore, a change in control would deprive Oyster Bay of the benefit from more than $6 million of accumulated tax losses.

Accepting Yealands' offer would also mean Oyster Bay shareholders would lose their entitlement to shares in any public offering of Delegat's Group shares.

Oyster Bay has established an independent committee of directors to consider Yealands' offer and appointed Ferrier Hodgson as independent adviser to prepare a report on the offer's merits.

Yesterday, Oyster Bay said it would do the same with Delegat's offer and urged shareholders not to sell until they received a target company statement.