New code again blocks Allied's bid for Montana shares

By DITA DE BONI

Allied Domecq's last-ditch effort to buy shares in Montana under the old, more lenient takeovers code has again been found wanting by the Takeovers Panel.

On Friday, the panel decided the "irrevocable promise" Allied made on June 29 to buy all shares in the company for $4.80 apiece did not comply with the intent of the new code.

Allied will now be barred for three more weeks from buying Montana shares under the "irrevocable promise" offer.

The restriction comes on top of last week's preliminary one-week ban.

The panel said it had made the decision after meeting lawyers from both parties.

Allied had little to say about the ruling, except that it was looking at its options and still believed its "promise" was legitimate.

Under the old takeovers code, a shareholder like Allied holding over 20 per cent of a company (Allied has just over 27 per cent of Montana) could have made an almost immediate offer for more shares on a "first-come, first-served" basis.

But under the new code, an offer cannot be acted upon immediately and, if a party holds more than 20 per cent of a company, it must bid for 100 per cent of that company and be able to secure at least 50 per cent.

Last week, Allied filed an offer for Montana shares in accordance with the new code. That offer is winding its way through due process just behind Lion Nathan's two-tiered offer, and is unaffected by Friday's decision.

But Allied might now be hard pressed to scoop up the shares it needs to take it to 50 per cent of Montana.

Lion already holds 44 per cent of Montana, even after being ordered to relinquish 19 per cent; its offer of $5.50 for 11 per cent of Montana shares is higher than Allied's $4.80 and it can begin trading sooner.

Meanwhile, the Standing Committee, which originally ordered Lion to sell the 19 per cent of Montana it acquired in a flawed bidding process, will mull the issue of whether the brewer can now buy shares at the same time as it is forced to relinquish them, an action that Allied Domecq says breaches the new code.