Montana joint venture talk keeps bubbling

By DITA DE BONI liquor writer

The market is again alive with rumours of a Lion Nathan/Allied Domecq joint venture to manage Montana, possibly with a third party called in to broker such an arrangement.

Both parties deny a deal is imminent but say it is a possibility that may be explored.

They also continue to posture over a pairing, each having said its rival brings "nothing to the table" in a joint venture arrangement.

But speculation points to a deal as the strongest solution for the liquor concerns. Lion, with 43 per cent of Montana, and Allied, with 27 per cent, are locked into sharing a board table unless a clear victor to the struggle emerges.

But it is likely any such pairing would be a strained one, judging by comments made by the parties in the past few months.

In the latest verbal jabs, Allied executive Jane Mussared said from Australia yesterday that Lion had twice approached Allied with deals that were "one way" only.

"We believe a joint venture should be one that gives both parties something in return. In Japan and Korea we have successful joint ventures with parties which work for us and we offer benefits to them."

She said Lion wanted to take money out of Montana, whereas Allied wanted to invest in the winemaker, not only with money but with knowledge and experience from the conglomerate's wine interests in other parts of the world, including Argentina and California.

Ms Mussared said, however, that Allied would "love to discuss a commercial outcome", although she was "not aware of such discussions in the last five hours".

Lion executive Warwick Bryan confirmed that his company had approached Allied twice to structure a deal but indicted that there had been little cooperation from the Bristol-based conglomerate.

He also said he was unaware of discussions at present. He said the brewer was considering its options and would not indicate when the company might publish its plans.

Commentators point out that both companies would be able to offer strong distribution channels to Montana product - Lion in Australasia and Allied in Britain and Europe - although in other areas their contribution is less discernible.

It is understood Allied has been eyeing the Montana agency in the British/European market seriously since an alliance of Pernod Ricard and Diageo bought Montana's regular distributor, Seagrams, for $19 billion.

Allied has since sought the distribution business of several ex-Seagrams contracts in international markets.

And there is a history of Allied and Lion working together - for example, Lion distributes Allied product in New Zealand.

But it is likely the relationship borne of current stockmarket Machinations would be terse, according to Rob Mercer of Forsyth Barr Frater Williams.

"Personally I'd be in favour. It would be a good outcome for Montana, but it would be a tense pairing, which might be disappointing for Montana in the long term."

Independent analyst Hugh Ammundsen said Allied would be able to extract similar benefits from a joint venture with Lion as it would with full ownership.

Meanwhile, Montana Group will announce its result for the year to June 30 on Friday.