Montana bid back in play

By ELLEN READ markets writer

British liquor giant Allied Domecq is refusing to give up the fight for winemaker Montana.

Allied has alleged that brewer Lion Nathan breached stock exchange listing rules by buying some of its Montana shares earlier than the rules allowed.

If those allegations are upheld, Lion could have to forfeit the shares in question.

The allegation was made in a formal complaint to Montana, in which Allied holds a minority stake. Montana's independent directors yesterday asked the stock exchange market surveillance panel to investigate Lion's recent acquisition of its 51 per cent stake in Montana.

Lion chief executive Gordon Cairns said last night that the company would "assist the panel should it decide to conduct an investigation and we are confident it will find that no breach occurred.

"Indeed, had the independent directors of Montana properly considered the facts, we are sure they too would have concluded there was no foundation to Allied's complaint."

In a bidding war this month, Allied's offer of $4.40 a share for a full takeover was trumped by Lion's counter-offer of $4.65 for a 51 per cent stake.

Lion's bid was fast-tracked when the market surveillance panel decided to grant it a waiver from normal takeover rules - a decision which angered small shareholders who felt they had missed out on a chance to participate.

Allied's complaint claims that Lion "entered into the restricted transfers prior to the expiry of the restricted transfer period" - in other words, that the company approached institutional brokers to buy shares on Thursday, February 8, despite the fact that the waiver did not allow Lion to start buying until Friday, February 9.

Montana had made its own investigations, obtaining legal advice from James Farmer, QC.

"On the basis of that advice from Mr Farmer, Montana considers that the purchase of shares by Lion Nathan may have breached [the listing rules]."

Montana said it had asked the market surveillance panel to appoint an independent body to investigate its claims, adding it had made suggestions as to who should be appointed to that body.

Even before yesterday's announcement, speculation over Montana's future was refusing to die down, with latest rumours suggesting that the company's chairman, Peter Masfen, was trying to broker a 50-50 joint ownership deal between Lion and Allied.

Mr Masfen declined to speak to the Business Herald yesterday.

Lion spokesman Warwick Bryan said Lion had suggested a joint venture to Allied at the time of Allied's takeover offer, but the approach had been rejected.

However, Allied's New Zealand spokesman, Julian Nixon from Hill & Knowlton, said Allied had looked at a range of scenarios and "at no stage have they said they have walked away."

While the Lion/Allied joint venture prospect was the favourite story, other Montana rumours include suggestions that Allied is going to sue the exchange over the granting of the waiver, that the Securities Commission is going to investigate Lion's stand in the market and that Lion is going to attempt a full takeover of Montana.

However, exchange managing director Bill Foster said he had not heard anything about legal action and Securities Commission chairman Euan Abernethy said his office had received no complaints and had no plans to investigate.

Mr Bryan said that while Lion did not exclude the possibility of increasing its stake at some stage, the company was not doing so at present.

Montana shares slumped after the Lion takeover but have since recovered and closed yesterday at $4.02.