Montana gets green light

By DITA DE BONI

Corbans Wines has inched one step closer to Lion's den with the Commerce Commission's clearing Montana to acquire the West Auckland-based wine firm.

The move would merge the country's second largest wine company, Corbans (market share about 25 per cent), with the largest, Montana, 25 per cent owned by brewer Lion Nathan and with a market share upwards of 35 per cent.

Last night, it was unclear whether Montana, which has already undertaken due diligence of Corbans, was on the verge of sealing the deal with the winemaker's owners, DB Group.

DB managing director Brian Blake and Montana chairman Peter Masfen were not available for comment.

Australian wine and brewing interests Foster's and Southcorp have indicated an interest in acquiring a stake in the New Zealand industry.

It is understood Foster's has been sidetracked by its purchase of California-based Beringers Wine Estates on August 29 for $A2.6 billion ($3.37 billion). Southcorp, also said to be interested in either Montana or Corbans, could be keener than ever to buy a New Zealand winemaker now its own aspirations to buy Beringers have been frustrated.

Montana's share price has gained steadily since interested parties started showing their intentions early this year. Shares closed at 267c, up 2c, yesterday. They were trading at a low of 173c in April.

A merger of Montana and Corbans would dwarf the production of the two other 2-million-litre-plus producers - Nobilo Wines, owned by Australian concern BRL Hardy, and Villa Maria.

Commerce Commission chairman John Belgrave said the commission was satisfied that, should the proposal go ahead, Montana would not acquire or strengthen dominance in any market in New Zealand.

The commission ruled that although a combined Montana/Corbans would have large market shares in a range of markets, including wine distribution, supply of wine-producing grapes, and the importation or production of white, red, sparkling and fortified wine, it would be "constrained by other factors and would not be dominant in any market."

The factors suggested by the commission include relatively few barriers for competing wine producers to increase their market share, and a "substantial amount" of competition on the domestic scene from Australian and other imported wine.

"In addition, the three main supermarket chains have considerable buying power and can switch between suppliers," it said.

Industry sources suggest the move to buy Corbans Wines was instigated by Montana's newest and largest shareholder, Lion Nathan.

Lion has quickly bumped up its stake to 24.97 per cent - and is poised to take up to 28.27 per cent if allowed to buy the balance of Guinness Peat Group's Montana holding - since its first foray on to the Montana's share register in May.

This was seen as an attempt to block market competitor Foster's, who were reported to be circling Montana as a possible acquisition. This would have meant Montana's considerable distribution channels would fall to the Australian brewing giant, strengthening distribution systems already in place.

Foster's was also reported to be interested in Corbans, prompting the Lion-Montana corner to play its hand by applying to the commission for clearance to acquire the wine producer in mid-August.

One acquisition Foster's did complete was that of Carters, New Zealand's biggest supplier of corks, wire and other wine production essentials, earlier in the year.

Investors are waiting to see how much Montana is ready to pay for Corbans. It could be worth up to $130 million.