Lion set to gulp winemaker

By DITA DE BONI

Brewer Lion Nathan looked poised to steal Montana Wines out of the clutches of global liquor concern Allied Domecq last night.

After close of trade yesterday, Lion revealed it had been granted a waiver by the Stock Exchange to stand in the market today with a bid of between $4.65 and $4.80 for shares in Montana.

Under the normal sharemarket two-day notice and pause regulations, Lion would have had to wait until Monday.

Its bid values Montana at more than $1 billion.

Lion's latest offer tops Allied Domecq's $4.40 bid, also scheduled to go live today.

The Business Herald understands that last night, broking houses were lining up institutional shareholders to sell their shares to Lion for $4.65 each just after midnight.

Allied declared Montana's minority shareholders "losers" under Lion's proposed course of action, although it did not offer a counter-bid.

"If sufficient Montana shareholders accept Lion Nathan's offer ... then I can only convey my sympathies to the locked-in 49 per cent," said Allied chief executive Philip Bowman.

"While Lion Nathan's bid is for a further 22 per cent of Montana's ordinary shares, Allied's offer at a price of $4.40 per share has been made to all Montana shareholders," he said.

The Allied offer had been favoured by Montana management, but the independent directors said last night that in light of Lion's waiver, they would look favourably on the brewer's bid if it was offered on a pro-rata basis.

Independent directors will go ahead with their meeting today to consider Lion's offer.

Deputy chairman Barry Neville-White said that although he was pleased Lion Nathan had lifted its bid from an original band of between $3.20 to $3.80, he was annoyed that only 22 per cent of shareholders would be offered $4.65 - just enough to reach Lion's stated goal of 50.1 per cent.

Shareholders have already been advised to take Allied's $4.40 offer, after Montana chairman Peter Masfen accepted the British conglomerate's bid for his highly coveted 20 per cent slice of the winemaker on Wednesday.

While the battle could have gone either way last night, the only firm consensus among observers after a day of heated bidding was that either way, Montana shareholders are firmly in clover.

Shares in the company shot as high as $5 before closing up 63c at $4.67 last night.

Lion Nathan's new bid for the company comes in at 1c higher than accountants PricewaterhouseCoopers' valuation band for the company last December.

At the time, Lion refused to raise its bid, saying anything above its $3.20 to $3.80 range was unjustified.

Yesterday, the company was putting a positive spin on having to stump up more money, pointing out that even if it bought the 22 per cent of shares it wanted at $4.65, its average outlay would still only be $3.37 - well within the original range.

Although chief financial officer Paul Lockey has said Lion will not sell its 28 per cent stake, it could make a profit of about $2 on each of the 60 million shares it bought at an average of $2.39 should it accept Allied's offer.

Mr Masfen would not return calls to the Business Herald yesterday, but it is understood he has been talking to Allied for some time with the aim of thwarting Lion's bid for control of Montana.

He is now in what some analysts have described as an awkward position. If he holds out for the higher price offered by Lion, he risks public censure as the deal does not extend to all shareholders.

If he rejects Lion's offer he risks becoming a minority shareholder in the company he has been intimately involved with for about 30 years.