Montana accepts Allied bid

By ELLEN READ markets writer

British liquor group Allied Domecq has moved to break the deadlock over ownership of New Zealand's largest winemaker, Montana, with a $4.40 per share takeover bid.

Montana's independent directors last night accepted the Allied Domecq offer and recommended Montana shareholders do the same. Montana chairman Peter Masfen, who has a 20 per cent holding in the company, said he also intended accepting, bringing to an end his own takeover battle with brewer Lion Nathan for control of the company.

No one from Lion Nathan, which owns 28 per cent of Montana and has also submitted a takeover bid, was available to comment.

A spokesman said all the relevant people were overseas until next week.

Another Lion spokesman, Warwick Bryan, said it was too early for the company to comment.

"It's early days yet. We would prefer not to comment until we have had a chance to think about it. We've got some interesting options here," he said.

Montana's directors said they would accept the offer in respect of all shares under their ownership or control.

Millstream Equities, a wholly owned subsidiary company of Allied Domecq, said yesterday that it intended to buy Montana shares at $4.40 per share between February 9 and 16.

Allied Domecq holds 56,956 shares so the offer is to acquire the remaining 214,603,572 or approximately 99.97 per cent.

Montana's directors had previously rejected the Lion Nathan and Masfen Group takeover bids, saying their offers were too low.

Both had said they wanted to buy up to 51 per cent of Montana Group and had offered between $3.20 and $3.80 to increase their stakes.

The offer adds a fresh dimension to the amalgamation of the Southern Hemisphere wine industry, so far led by Australian brewer Fosters and BRL Hardy.

Speculation has been mounting as to the future of other players, such as Southcorp.

Lion's move into Montana last year was widely seen as an attempt to protect its own distribution network in New Zealand.

PricewaterhouseCoopers last year put a fair value on Montana of between $4.16 and $4.64.

The Allied Domecq offer, at $4.40, is in the middle of this range.

Allied Domecq's offer is for 100 per cent of Montana's shares, but is conditional upon the purchase of 50.01 per cent of the shares by 15 February. The company has undertaken to make a written offer for any balance of the shares within 90 days of the offer being declared unconditional.

Under the listing rules of the New Zealand Stock Exchange, Allied Domecq is entitled to buy 19.9 per cent of Montana shares in the market immediately, and can begin its stand in the market for the balance of the shares from tomorrow.

Montana Group deputy chairman and independent director Barry Neville-White said it was in the interests of all shareholders to accept the Allied Domecq bid because it was for 100 per cent of the shares so provided all shareholders with an equal opportunity to participate and was at the mid-point of the value range determined by PricewaterhouseCoopers in its appraisal report.

He said other reasons for accepting were that the offer was at a premium of 60c a share (15.8 per cent) above the high point of the range indicated in the Masfen Holdings and Lion Nathan notices and because the escalation clause in the offer ensured that all shareholders would receive the highest price paid by Allied Domecq for any shares by June 8.

He said the directors considered that the worldwide size and scope of Allied Domecq's liquor operations had the potential to significantly enhance the international profile and prospects of the New Zealand wine industry.

Mr Neville-White said the directors did not have an alternative offer in writing when it recommended against the Lion and Masfen bids. He said he had been aware of the Allied bid only in the past few days.

"It's been well speculated that a contested shareholding such as we had between Masfen and Lion interests was not in the best interests of the company," Mr Neville-White said, explaining why those bids were rejected.

He said he did not expect a successful takeover to result in major change for Montana.

"They haven't signalled anything like [major operational changes] and when you get a company that's going as well as this one, I think it would be very foolhardy to rush in and make a lot of changes," he said.

One of Montana's biggest institutional investors, though under the 5 per cent disclosure level, is fund manager Armstrong Jones.

Investment manager Shane Solly said the British company's move recognised Montana's global attractiveness but he was yet to decide whether to accept the offer.

Montana's share price closed at $4.04 last night.