Lion leaps ahead in the race for control of winemaker Montana

Friday 6th July 2001

GORDON CAIRNS: The Lion chief executive said yesterday the company's offer demonstrably didn't amount to a put option

By Nick Stride

Allied Domecq yesterday launched its expected 100% takeover over for Montana but Lion Nathan could be back in the winemaker's driving seat before the offer opens.

Allied's new offer for all Montana's shares at $4.80 a share was announced on Wednesday but under the Takeovers Code it won't be able to buy any shares until July 18, three days after a competing Lion offer goes to market.

Allied has said it is challenging Lion's two-stage offer on the grounds it effectively offers a put option to whoever buys the 19% of Montana Lion has been ordered to sell as "defaulter's securities."

Lion has 30 days from June 29 to sell those shares, reducing its stake from 62% to 43.5%. But it has made a firm offer to buy 11% of the company at $5.50 a share, pro rata from all shareholders, and has filed notice of intention to buy all the rest of the shares at $3.70.

Success with its $5.50 offer would take Lion back to 54.5% of Montana.

However Allied's Jane Mussared said yesterday that wouldn't be the end of the game.

"They might reach nominal control of the company but they can't do anything with it with us sitting there with our current holding. To extract cash flow, etc, they need 66%."

A shareholder accepting both Lion offers would get a lower overall price than they would get from accepting Allied's $4.80 offer.

Montana's few remaining minority shareholders now have a complicated task working out how to maximise the value of their holdings, as will those who buy Lion's 19%. One possibility is that the two could come to a commercial arrangement.

Lion chief executive Gordon Cairns said yesterday its offer demonstrably didn't amount to a put option. There were no strings attached to the offer and whoever bought Lion's defaulter shares could sell to anyone, or hold them.

Allied's 100% offer comes in addition to an offer announced on June 29 in which Allied made an "irrevocable undertaking" to buy Montana shares at $4.80.

That move, which Mr Cairns described as a "straddle offer" astride the old and new takeovers regime, has been challenged by the Takeovers Panel, which will examine it today.

Mr Cairns said he was confident the panel would "knock it over" as the law didn't recognise a transition period between the two regimes.

No date has yet been set for the Stock Exchange's standing committee to consider a complaint by Lion that Allied and Montana chairman Peter Masfen had an "arrangement" under the listing rules and that the shares Allied bought from Mr Masfen were therefore defaulter securities.

Mr Cairns said the existence of the claim was a dilemma for Allied. It could lose a lot of money buying further Montana shares at high prices if its original 26% stake was subsequently found to be in default.

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