Montana offers too low, says appraisal report

By DITA DE BONI

An independent appraisal has upped the ante in the fight for control of Montana Wines.

The rival bidders, Montana's chairman Peter Masfen and Lion Nathan, have been told that the prices they are offering for the company's shares is less than fair.Independent appraisers PricewaterhouseCoopers last night put the "fair value" for Montana at between $4.16 and $4.64 a share, significantly more than the range of $3.20 to $3.80 the two bidders have said they intend paying for more shares.



The mid-point of PricewaterhouseCooper's price range, $4.40, represents an 87 per cent premium over Montana's 12 month average share price. The shares closed up 8c yesterday at $3.88.

Montana's independent directors have backed the PricewaterhouseCoopers report and say that shareholders should not sell at the prices that are being offered by Lion or Masfen Holdings.

The report says the recent acquisition of Corbans Wines has increased the scale of Montana's operations, making it virtually impossible for a competitor to match its range of brands, production capability, market position, and level of exports.

It says its valuation is relatively conservative, because it does not include any allowance for new vineyards or production growth beyond that offered by existing plantings on company-owned land. Masfen Holdings, which owns 19.95 per cent of the company, and Lion Nathan, which has 28.27 per cent, have signalled they might lift their holdings to 51 per cent.

Last week, Lion was given Commerce Commission approval to lift its shareholding in Montana to the 100 per cent level.

PricewaterhouseCoopers says the cost savings that Lion could achieve with full ownership of Montana are not considered in its report.

Barry Neville-White, deputy chairman of Montana Group, and an independent director, said the independent directors believed there was potential growth in the value of Montana shares beyond the upper end of the valuation range set out by PricewaterhouseCoopers.

He said the independent directors did not intend to sell their shares at the prices indicated by Lion and Masfen Holdings, and recommend shareholders should not sell at those prices either.

Lion's head of investor relations Warwick Bryan said it was too early for the brewer to comment on the report.

Lion's restricted transfer notice, filed on November 24, expires on Friday, after which Lion can stand in the market at the share price it has specified.

Lion also has the option of varying its price range on two days notice to the stock exchange.

Masfen Holdings has the same option when its restricted transfer notice expires on December 27. Peter Masfen could not be reached for comment last night.

Six brokers spoken to by the Business Herald put their valuations for Montana between $4 and $4.30 a share.

Most agreed with PricewaterhouseCoopers' comment that the full effect of merger with Corbans had not yet been fully calculated and these were likely to add to current valuations.