Rampant Lion toasts victory

By DITA DE BONI liquor writer

Lion Nathan chief executive Gordon Cairns pleaded to be "left alone to enjoy a celebratory glass of wine" yesterday before outlining the brewer's plans for Montana.

But Lion Nathan's 51 per cent shareholding in New Zealand's largest winemaker - confirmed last evening - was "just the beginning" of its foray into wine, he promised.

"Our position has been entirely consistent from day one. We have gone into wine as a growth strategy, and have recognised [Montana] as the jewel in the crown of this country's wine industry.

"We are enthusiastic and long-term investors."

Mr Cairns refused to speculate on whether Lion would lift its Montana stake and said he could "not conceive of the possibility" that Bristol-based Allied Domecq, which lost to Lion in the tussle to control Montana, would come back with a higher offer sufficient to tempt Lion away from its newest prize.

He said Montana would "now be safe."

Shareholders could rest assured that the most important thing for all parties would be to ensure that Montana's five-year plan - previously decried by Lion as too ambitious - was realised.

Mr Cairns said Lion would be "delighted" if chairman Peter Masfen considered staying on at Montana's helm, and promised that management would be left alone to do its job.

But the board looks set to change to reflect Lion's new majority interest. Mr Cairns would not elaborate on how this is to be achieved, although it is certain that the company will want to increase its lone directorship - held by him - at Montana's next board meeting on March 9.

Lion is also eager to do some damage control over the controversy surrounding its taking control of Montana.

The company, along with the Stock Exchange, has come in for vitriolic public criticism for the way it shut small shareholders out of contention for the $4.65-a-share price paid for its final stake.

"I would like to make a fundamental point," said Mr Cairns. "The criticism of the waiver is misplaced. The idea that the bid was tipped with the waiver is erroneous ... By granting us the waiver all the Stock Exchange did was enable all shareholders to be [fully informed].

"Lion at all times acted within the laws ... and acted to preserve the interests of its shareholders."

Questions about why it was overwhelmingly institutions rather than small shareholders that ended up selling their holdings at a significant profit were referred to Credit Suisse First Boston, Lion's broker.

"The point is, Allied had a full 15 1/2 hours to respond to the bid [after Lion received the waiver late on Thursday] and didn't. It wasn't about the waiver, it was about the price. We pitched the price perfectly, and Allied either decided not to, or were unable, to respond."

That view held some sway with brokers the Business Herald spoke to yesterday. One, who did not want to be named, said he was stumped why Allied Domecq had not said on Friday that it would at least consider coming back with a better offer.

Another analyst said Allied would in fact have had more to offer with its global distribution network and that the domestic wine industry would have been able exploit Allied's European networks, in particular, "once it is able to keep up with demand."

Neither Wine Institute chairman Peter Hubscher nor chief executive Philip Gregan could be reached last night.

But Terry Dunleavy, inaugural chief executive of the institute and editor of WineGrower magazine, said it might well be that Kirin, the Japanese power behind Lion, foresaw huge opportunities for local wine in Asian markets.

"What New Zealand wine has going for it in Asia is our freshness and our intensity of fruit and varietal character, all of which appeal to emerging Asian wine consumers.

"Either way, let's hope that Montana's new owner understands the long-term commitment which the wine industry requires, the unity of purpose which has enabled such a wide range of New Zealand companies to support each other in penetrating world wine markets and the need to retain and to enhance the distinctive characters of the wines which are unique to [this country]."