Montana pulls cork on bid to buy chief rival Corbans

By PAULA OLIVER

In a surprise move, wine group Montana yesterday applied for Commerce Commission clearance to buy its major domestic competitor, Corbans.

The buyout would give Montana a large slice of the domestic market, and strengthen its supply network for exports.

Speculation surrounding potential bidders for Corbans has been rife since DB Group said in May that it was looking for buyers, but Montana's bid has surprised many.

The move follows close on the heels of Lion Nathan's taking a larger 28 per cent stake in Montana.

The commission is now considering what impact Montana's purchase would have on local competition, and will announce its decision within 10 days.

Both Montana and Corbans own vineyards, buy grapes from independent growers, and produce and distribute wine in local and overseas markets.

Montana chairman Peter Masfen said last night that the company had made a bid for Corbans and was in early stages of due diligence.

"We lodged interest in a non-binding bid procedure," he said. "This application is now part of the due diligence process, and I don't know what other parties may or may not be involved."

Mr Masfen said the potential purchase would not make the company big by international standards, and that was where the future of the New Zealand wine industry rested.

"If you're looking at a strong, financially viable business, it must be able to compete in an international market," he said.

"We would think it's illogical for the health of the New Zealand wine industry to decline the application."

Lion Nathan chief executive Gordon Cairns declined to comment, a spokeswoman saying he had yet to attend a Montana board meeting.

Speculation surrounding potential buyers for Corbans has mainly centred around Australian giants Foster's and Southcorp.

UBS Warburg analyst Malcolm Davidson suggested Montana could be looking at splitting Corbans and selling its distribution network to a competitor to ensure there was still domestic competition. But there was likely to be opposition to the bid, he said.

"Montana could strip off some assets and sell them, particularly the distribution network, which would allow someone like Southcorp to enter the local market.

"If they said they would split it, they would have a reasonable chance of getting clearance."

Mr Masfen called the speculation a "stretch of somebody's imagination."

DB Group is understood to be seeking final bids by September 8 from those undertaking due diligence.