Lion's share gets bigger

By DITA DE BONI liquor writer

Brewer Lion Nathan has once again trumped its bid rival Allied Domecq in the challenge for ownership of winemaker Montana Group.

While the legitimacy of Lion Nathan's holding in Montana is debated by a trio of QCs, Lion has snared a larger holding in the New Zealand winemaker a full three days before it is officially allowed to start buying in the market tomorrow.

Lion said last night that it had acquired a further 1 per cent of Montana between Friday and yesterday, costing $10.6 million.

The brewer has been able to creep up the share register under the provisions which allow a substantial security holder to top up its holding in increments - up to 5 per cent in each year following the purchase of a major stake.

After the closing bell last night, Lion once more upped its bid to a range of between $4.65 and $5.05. PricewaterhouseCoopers last week assessed Montana's value at between $4.24 and $4.72 a share.

Meanwhile, Allied Domecq has withdrawn its formal offer from the market after Montana's shareprice rocketed above its intended $4.55 purchase price. Montana stock gained 15c to close at $4.75 yesterday.

Shareholders who did not succumb to Lion Nathan's $4.65 bid in February continue to roll in clover, with their shares gaining more than 3 per cent in one day, more than 14 per cent in the past month and 140 per cent in the past year.

Allied Domecq will reconsider its offer, although spokeswoman Jane Mussared said the company did not have to give a price.

She said last night that the liquor concern was "sitting round considering its next step" and that it was "possible" that it would name its price in the market today.

Allied is not bound by a restricted transfer notice and so can name any price it wants.

Ms Mussared said it remained committed to taking its shareholding to 10 per cent.

Many analysts believe Allied has changed tack by switching brokers from JB Were to UBS Warburg.

JB Were, alongside Goldman Sachs, advised Allied in the last round of pitched battle when its originally appealing $4.40 bid was gazumped by Lion's $4.65 offer, which with the waiver it obtained from the stock market gave easy access to 51 per cent of Montana.

But Ms Mussared said JB Were had been aligned to several other parties in the market before, and Allied wanted to create a "distinction" between parties involved.

But other analysts say that changing brokers may not be enough for Allied.

Guardian Trust's Rickey Ward said: "[Allied] need to put a five in front of their offer price if they're going to get 10 per cent.

"They need to show some real commitment if they're going to get there ... Even if they are able to buy the 20 per cent stake held by the family interests of Peter Masfen, that still leaves them a minority holder unless they can be sure Lion will be forced to divest part of its holding."

Market analysts yesterday seemed relaxed about Lion's ever-increasing share price. They said it had so far only paid an average of $3.37 for shares in the wine maker and could afford the premium.