Lion, Allied tear off NZSE's muzzle

Friday 22nd June 2001

By Nick Stride

A war of words has broken out between Montana rivals Lion Nathan and Allied Domecq - despite the Stock Exchange's efforts to keep the two quiet.

"Allied Domecq have tried to trivialise our complaint," Lion chief executive Gordon Cairns said yesterday.

"We were asked by the market surveillance panel not to comment. We do so because Allied has discussed it publicly."

An exchange-appointed standing committee will meet in Auckland tomorrow to hear arguments and determine the next step in the Montana takeover battle.

The committee found last month that Lion had breached the exchange's listing rules when it bought Montana shares on the night of February 8. It identified transactions involving 10% of Montana's shares as being in breach. Lion has 62% of Montana and Allied 27%.

The committee will not consider Lion's counterclaim against Allied. Lion alleges Allied and Montana chairman Peter Masfen had an "arrangement" under which Mr Masfen would sell his shares to Allied.

That made them "associates" and they should have acted as such in accordance with the listing rules, Lion alleges.

Mr Cairns said the committee's new definition of a "transfer" assisted Lion's case. "It applies to Allied's purchases. They were in breach if we were in breach."

He dismissed reports Lion complained to Montana and the exchange about Allied's share purchases only last week. "We complained before the judgment on May 31."

He also took exception to the language Allied has used to describe the committee's determinations.

"They used 'meaningful penalty.' It's inappropriate to talk about a 'penalty' in public - 'remedy' is the word."

"They've also mentioned 62% [as the amount of shares Lion should be obliged to sell]. It's inappropriate to debate in the media what the percentage should be."

Mr Cairns said Lion had initiated three rounds of talks with Allied chief executive Philip Bowman about finding a commercial settlement. These had been from the very beginning until as late as last week. "We're always open to discussion", he said. "We're already partners in New Zealand Wines and Spirits."

He declined to comment on what effect the July 1 enactment of the Takeovers Code would have on Lion's Montana position.

Under the code if a holder of more than 20% of a company wants to lift its holding it must make an offer for 100% of the shares, or pro-rata to all shareholders for the additional shares it wants.

If the Montana standing committee rules Lion must sell enough shares to take its holding below a controlling 50.1% it will have to try to regain control under the code, if it chooses to do so.

Peter O'Brien

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