Lion stymied once more

By DITA DE BONI liquor writer

Book building practices commissioned by Lion Nathan have once more tripped the brewer on its way to control of takeover target Montana.

The Takeovers Panel - which met in a marathon session ending early yesterday morning - has decided the latest two-tiered offer tabled by Lion and contingent on the sale of its 19.9 per cent defaulting securities is inconsistent with the new Takeovers Code.

It has pinned its problems with the controversial offer on information presented to potential bidders through lead broker Macquarie Equity Capital Markets, which it describes as "revealing."

Specifically, the panel says, is a section in Macquarie's investment sheet to potential institutional buyers of Lion's 19.9 per cent defaulting securities entitled "Pricing of Divestment" which is "focused explicitly on their average realisation the institutions would agree if they bought from Lion and then accepted Lion's offer(s) for their Montana shares. All scenarios require the partial offer at $5.50 and the $3.70 offer."

Although partial offers are permitted under the code, dual-priced single offers are not.

Lion's offer appeared to be the latter.



Lion was forced to relinquish 19.9 per cent of Montana last month after the standing committee found Lion broker CSFB had prematurely solicited sellers of Montana shares on the night of February 8.

The penalty handed to Lion by the Takeovers Panel yesterday was the second within 24 hours, with the reconvened standing committee ruling on Monday that Lion's two-tier offer breached both listing rules and a previous committee ruling.

Both the standing committee and the panel have also found fault with various announcements made by Lion top brass, including chief financial officer Paul Lockey's statement that "Lion Nathan's offers provide Montana shareholders with an opportunity to sell all their Montana shares at fair value."

As a result, the panel said, "shareholders were encouraged to evaluate both offers together," something which also did not comply with the new Takeovers Code.

The panel extended a ban on Lion's buying shares under the offer for a further 21 days.

Lion Nathan was subdued on its double censure yesterday, saying only that it was considering its options and would not comment until it had seen a full written account from the standing committee of the decision. It is unknown when that decision will be made public.

It is thought today's post will hold the clues to Lion's ongoing fortunes in the Montana stoush. Allied is mailing its Montana takeover offer at $4.80 a share to shareholders, which is conditional on its gaining 50 per cent control.

A crucial aspect of that offer is whether it is open for 30 or 90 days. If it is open for only 30 days, it will not overlap Lion's offer and could give Allied an advantage.

Lion shares have climbed steadily since Valentine's Day. They were at a low of $4.54 then, but at the close of trade yesterday they were $5.50, down 2c for the day.