Allied still ready to pounce on Montana

Friday 2nd March 2001

By Nick Stride

Allied Domecq is still serious about buying Montana Group and would consider lifting its $4.40 a share offer if a third bidder emerged, corporate affairs director Jane Mussared said yesterday.

Ms Mussared is in Auckland to monitor the progress of Montana's challenge to Lion Nathan's overnight raid earlier this month.

At issue is whether Lion breached the Stock Exchange's listing rule 4.5 when its broker, Credit Suisse First Boston, contacted institutional shareholders in Montana on the evening of February 8.

The exchange's market surveillance panel on Wednesday confirmed Montana's suggested standing committee of Sir Duncan McMullin, Sir Ian Barker and Bill Wilson QC would investigate Montana's complaints.

Under the listing rules the exchange has the power to make a ruling on whether a breach has occurred. It delegates this to the panel. The panel has further delegated its power to the committee.

The committee will examine the events of February 8. Lion had on that day obtained from the panel a waiver, from listing rule 4.5, which effectively allowed it to buy shares from midnight.

In the afternoon and evening Credit Suisse First Boston approached Montana's institutional shareholders asking them for undertakings to sell their shares to Lion for $4.65 a share. The institutions were entitled to withdraw their undertakings at any time before midnight and, in CSFB's view, the sales were not effective until after midnight.

The listing rules interpret a transfer as "a transaction whereby one party disposes of ... or proposes to dispose of ... any interest in or right of title to any equity security ..." and "any transaction whereby the holder of the equity securities enters into a commitment (whether conditional or unconditional) to sell the equity securities ... ."

Should the committee find CSFB's pre-midnight solicitations met those definitions it could declare any or all of Lion's Montana shares "defaulter securities."

In that case under rule 4.7 Montana could give Lion one month to sell the shares, after which it could itself sell the shares through the exchange "or in some other manner approved by the exchange."

The committee's next move is to decide whether to give Lion notice that it believes Lion to be a defaulter. Lion would then have "a reasonable time" to respond before the committee made its ruling. Observers believe if Lion is declared a defaulter it will be required to sell only the 18.5% of Montana's shares it collected that night.

Ms Mussared said Allied would reconsider its bid on the basis of whatever happened. It considered Montana to be "a very significant asset."

She acknowledged that, with all Lion's shares (51%) potentially up for sale, another bidder might emerge.

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