Montana sale to Foster's tipped

By DITA DE BONI

The price may finally be right for the sale of New Zealand's largest wine maker, Montana, to Australian liquor behemoth Foster's.

Strong industry rumours before Easter suggested that Montana, which has been courted several times by Foster's, had finally agreed to become part of the giant Australian liquor producer's empire.

No one would speak on the record about a possible purchase, but the Business Herald understands Foster's-owned Cardmember Wines executives were whisked to Australia late last week for meetings at head office.

Cardmember was bought by Foster's in 1997 for $A160m on both sides of the Tasman, and has since had its key positions filled with Foster's ``rising stars,'' one source said.

The direct-sell wine marketing business is owned by Foster's wine arm, Mildara Blass, which has reportedly been on a spending spree recently, buying up direct-sell operations in Europe, Britain, Japan and the United States.

The Business Herald understands a deal between Montana and Mildara Blass was on the table two months ago, but stalled after chairman Peter Masfen sought $2.50 a share for his 20 per cent of Montana. Foster's was said to consider anything over $2 a share too expensive, said another source.

It is unclear what compromise may have been made between the two parties. Montana Group shares have traded through the year at an average of $2.01, although the share hit a yearly low of $1.73 on the Wednesday prior to Easter. The stock has since gained 5c, closing at $1.78 mid-day last Thursday.

Neither Montana managing director Peter Hubscher nor Montana Group chairman Peter Masfen would confirm a sale, with Mr Hubscher saying the latest industry scuttlebutt was nothing more than a case of ``rumour and supposition.''

Mr Masfen again denied he was looking to sell his 20 per cent shareholding, but said Montana stock was ``very materially undervalued'' as it was strategically very important to the entire wine industry in New Zealand.

Mildara Bass also refused to confirm or deny a purchase, saying it never commented on market speculation.

Foster's has been fishing around New Zealand for a wine operation for some time, with one source saying the company had approached both Corbans and Matua Valley before coming back to Montana.

It is thought a link between Foster's and a New Zealand winery would provide the Australian parent with exposure to key New Zealand varietals, while any benefit to Montana would start with an even cosier relationship with its second-biggest export market after Britain.

Rumours of a sell-off of Montana have been overshadowed in recent weeks by the seemingly inevitable sell-off of Corbans Wines by owners DB Group.

Last week, DB announced it was seeking a strategic partner for Corbans, and Mildara Blass was said to have made the shortlist, along with Montana and US concern and DB stakeholder Palo Alto.

Many in the industry say talk of a strategic partner is DB-speak for ``wanting to spin the business off.''

While there is a unanimous feeling in the industry that Corbans has not lived up to its potential, as witnessed by the fact the winery's performance has slipped behind Montana in the last 10 years, one analyst said DB needed Corbans to ensure its growth.