Lion Nathan changes tactics

MELBOURNE - Brewer Lion Nathan said it would not extend its A$420 million ($481 million) bid for unlisted Coopers Brewery but would continue legal action that could allow it to make another offer later.

The bid for Coopers was derailed in December when Coopers shareholders voted to strip Lion Nathan of its pre-emptive rights, effectively blocking it from buying any shares.

Lion Nathan in January extended the bid by two months to March 20, but a spokesman said yesterday that it would not be further extended.

The company is continuing to pursue a range of legal actions that could clear the way for another bid.

"We obviously reserve the right to relaunch an offer at some point if our rights were re-instated," the spokesman said.

The company was also continuing to look at opportunities to expand by entering the dark spirit, ready-to-drink (RTD) market in Australia, where bourbon, rum and whisky-based drinks are among the most popular retail liquor types.

Lion Nathan chief executive Rob Murray told last year's annual meeting that if the Coopers bid did not go ahead and if the RTD entry was not capital intensive, then it could look at some form of capital management.

Lion Nathan is 46 per cent owned by Japan's Kirin Brewery, which has said it would be interested in owning more of the company although it has no plans to increase its stake.

Credit Suisse said in a recent research report that Lion Nathan had the balance sheet capacity to conduct at least a 10 per cent share buyback.

"If Lion Nathan were to repurchase 10 per cent of its outstanding shares, Kirin's ownership stake would creep up to 51 per cent, assuming it does not participate," it said.

- REUTERS