Lion eyes up Erceg empire

Lion Nathan has declared its interest in the late Michael Erceg's Independent Liquor empire.

The transtasman brewer yesterday lodged an application with the competition regulator for clearance to buy Independent, which dominates the New Zealand market for ready-to-drink spirits with its brands such as Purple Goanna, KGB, Woodstock Bourbon and Cola, and Vodka Cruiser.

The application to the Commerce Commission does not necessarily mean Lion has struck a deal to purchase Independent. But it shows it is a keen buyer and believes a sale is a strong possibility.

Erceg's family are reviewing the future of the business, valued at between $700 million and $1.2 billion, following the drinks baron's death in a helicopter crash last November.

The commission is expected to focus its investigations on both companies' distribution and brewing activities.

Lion is New Zealand's dominant brewer and a large drinks retailer through its Liquor King and Lion Nathan Wines and Spirits divisions.

Lion Nathan is a top contender for the business, but is expected to be bidding against other trade buyers such as Foster's, and private equity funds.

In a brief statement to the stock exchange Lion said: "Lion Nathan has today lodged an application with the New Zealand Commerce Commission for the clearance necessary to potentially acquire the Independent Liquor business."

Erceg, who graduated with a doctorate in mathematics from the University of California's Berkeley campus, founded Independent in 1987.

Within 10 years he expanded its sales operations into Australia, before starting production in Sydney in 2000 and in Melbourne in 2001.

Independent also opened a plant in Britain in 2002 and exports to Asia and North America.

Lion Nathan this year plans to enter the dark spirit ready-to-drink market in Australia, where bourbon, rum and whisky-based drinks are among the most popular retail liquor types.

Lion's chief rival in New Zealand, DB Breweries, said in May that it was not in the running to buy Independent.

Its chief executive, Brian Blake, has noted that Independent's price would be determined by whether buyers believed it could maintain annual profits estimated at $150 million in a very fickle market.

The commission will publish a public version of the application this week.

MIXING DRINKS

Lion Nathan

* Transtasman brewer. Its local operations include:

* New Zealand Breweries, which primarily brews beer.

* Lion Nathan Wines and Spirits, which primarily distributes wine, spirits and ready-to-drink (RTD) spirit brands under licensing agreements.

* The Liquor King chain of stores.

Independent Liquor

* Manufactures a range of RTD spirit brands such as Purple Goanna, KGB, Woodstock Bourbon and Cola, and the Vodka Cruiser range.

* Supplies a number of beer brands such as Carlsberg, Grolsch, and Tuborg, and wine and spirit brands.

* Production facilities in Britain and Australia.