Brewer moves to clarify its terms

By DITA DE BONI liquor writer

Lion Nathan yesterday defended its controversial offer for Montana shares, claiming its intentions had been entirely honourable.

Two days ago, the Takeovers Panel said it would look into the Lion offer after finding that some comments the brewer made had possibly breached the intent of the new takeovers code.

It then froze Lion's attempts to buy more Montana shares.

The panel won't comment on the issue until it meets on Monday but is thought to be concerned about public statements by Lion that have hinted that the bid could be construed as a single offer with differential pricing, which is not allowed under the new code.

Partial offers are permitted, being offers that are extended to everyone for a percentage of shares and then scaled back on a pro-rata basis on acceptance.

But a dual-priced single offer, including an offer that has two stages at different prices which are linked, is not permitted.

It is understood the panel believes that some comments Lion Nathan made, including the brewer's stated intention that it wanted 100 per cent of Montana, may link the two offers as one.

Other comments that may have caused Lion grief include those mentioning the averaging-out of its two-tiered offer.

Lion top brass have talked of average in-prices, which they do to assuage shareholder fears that they are spending too much money on Montana and paying more than their own valuation of the company.

The in-prices calculations are based on assumptions, including Lion's completing its two-tiered bid.

But Lion chief executive Gordon Cairns said it was important to understand that "only if Lion Nathan is successful in securing more than 50 per cent of Montana under its $5.50-per-share partial offer does it intend to make a subsequent offer for the remainder of Montana at $3.70."

"If made, that subsequent offer will not be launched until after our partial offer has closed.

"If the partial offer is not successful, Lion Nathan will not launch a subsequent offer at $3.70 a share."

While Lion could not envisage circumstances in which it would not make the subsequent offer if it reached 50 per cent, "our intention to make the subsequent offer is simply a stated intention and not a binding commitment."

Meanwhile, Montana's independent directors issued a statement yesterday which recommended that shareholders not make a decision either to reject or accept an offer from either Allied or Lion until they had considered the statement from Montana relating to each offer.

This statement on each offer is to be sent around July 30.

It will include a recommendation on each offer, an independent report from PricewaterhouseCoopers, a recent history of goings-on between the competing parties and detail the recent selling prices for Montana shares.

Montana shares closed yesterday at $4.50, down 3c.