Lion fails in bid to delay Montana selldown

12:30 pm

Lion Nathan today failed in its legal bid to stall a New Zealand Stock Exchange ruling ordering it to sell down its stake in winemaker Montana Group.

Montana is caught in a NZ$1 billion takeover battle between Sydney-based Lion and Britain's Allied Domecq Plc, the world's second-largest spirits company.

Lion, which owns 63 per cent of Montana, was ordered by the NZSE's Montana Standing Committee to reduce its holding to around 44 per cent for breaching stock exchange rules when it bought a key block of shares from institutional holders late one night in February.

Lion objected to the rulings and penalty imposed and on Friday asked the High Court in Auckland to put the forced selldown on hold while it pursued a judicial review.

Judge Noel Anderson ruled on Monday that the terms of the listing rules to which all companies must comply, allowed for dispute resolutions within the exchange itself.

"The court does not have jurisdiction to enlarge the period for Lion Nathan to sell down its shares."

Anderson said the legal reasoning of the standing committee decisions would be dealt with in a later substantive hearing but in his view, the findings of the standing committee would be correct.

Lion Nathan chief financial officer officer Paul Lockey and Allied Domecq spokeswoman Jane Mussared both declined to comment on the ruling.

Lion has until August 17 to complete the selldown.

Shares in Lion, 46 per cent owned by Japan's Kirin Brewery Co, closed Friday unchanged at A$4.38 in a soft Australian market while Montana shares - tightly held by the two competing bidders - closed down three cents at NZ$4.47 in a slightly positive New Zealand market.

An NZSE official said it the exchange has halted trading in Montana and Lion shares, pending official notification of the ruling.

- REUTERS