Montana head moves to grab a Lion's share

By DITA DE BONI

Montana Group chairman Peter Masfen has thrown down the gauntlet, challenging Lion Nathan's bid for 51 per cent of the company with a rival bid which looks almost identical.

Mr Masfen yesterday filed a "notice of restricted transfer" (RTN) stating that he might seek a further 31.03 per cent of Montana - another 66.61 million shares - to take his holding to 51 per cent.

His offer price - between $3.20 and $3.80 - is the same as Lion Nathan's.

Boosting his 19.7 per cent shareholding to 51 per cent would cost Mr Masfen up to $253 million.

Neither he nor Lion Nathan would comment on the counter-bid yesterday, preferring to wait for a PricewaterhouseCoopers appraisal report on Lion's offer, due out this week.

The Commerce Commission ruling on whether Lion will be allowed to buy 100 per cent of Montana is also due by Friday.

Lion Nathan and Montana have played down any discord between them since Lion launched a raid on the Montana share register in May.

But Montana has denied its largest shareholder a second seat on its board of directors (Lion chief executive Gordon Cairns was appointed to the board recently) and stated that the $2.30 a share that Lion paid the first time was "significantly undervaluing the company."

Market analysts were divided on what Mr Masfen hoped to achieve, but most said the situation would ultimately benefit shareholders by raising share values.

But Montana's share price took a dip yesterday on news of the potential showdown, dropping 10c to close at $3.80.

Some analysts say Mr Masfen wants to raise his stake to keep his options open. His group, Masfen Holdings, will have seven months to increase its shareholding from 19.7 per cent to 51 per cent after the required 15 days' notice and pause have elapsed.

Warren Doak, an analyst with Deutsche Bank, said he could not second-guess Mr Masfen's gameplan, but pointed out that an RTN was needed to raise his holding to 20 per cent and beyond.

"I don't read too much into it ... He's required to give a range [in] the submission of an application and most people would expect an independent valuation."

Andrew South, equities portfolio manager at BT Funds Management, said shareholders would await the independent valuation before deciding what to do.

"All [today's events] indicate is that Peter [Masfen] is keeping his options open," he said.

Malcolm Davidson, an analyst with UBS Warburg, said Mr Masfen "could be serious in respect of not wanting to lose control."

He also said it was possible the RTN had been filed to force Lion to offer a premium for control.

One analyst, who did not want to be named, said Mr Masfen's actions suggested that he thought Lion's offer was not enough, and the fact that he was prepared to mop up the shares himself showed that they were, in his opinion, worth more.

He said it was conceivable that at some point there could be two major bidders standing in the market seeking the same shares.

The decision would probably come down to who offered the better price.

Lion has a time advantage over the Masfen camp, as it can begin buying shares on December 15.

The market has long debated whether Mr Masfen could ever receive a high enough price for his shares to persuade him to sell out completely, or whether the price he wants is a "moving feast," as others have suggested.

Mr Masfen's previous reactions to the question of selling out of Montana altogether have ranged from bemused to apoplectic.

Forsyth Barr Frater Williams investment analyst Rowan Johnston said the latest development "comes down to the fact that Masfen is committed to the company and wants to retain a stake, and has been forced to file the RTN to retain control of the company."

However, Mr Masfen reduced his Montana shareholding during the 1990s. In 1996, it fell from 33.74 per cent to 27.3 per cent, and by a further 5.6 per cent the following year. At that time, Montana shares were worth 66c.