Stalemate in Montana battle

By FRAN O'SULLIVAN

Lion Nathan and Allied Domecq have reached stalemate in the Montana battle after chairman Peter Masfen flicked a 35 million share parcel to the UK brewer.

A commercial settlement in which one party buys the other out - or a joint venture is formed - is now being discussed.

After a behind the scenes auction conducted by Mr Masfen's broker, JB Were, Allied Domecq paid $4.80 a share for the Masfen stake late on Thursday to take its own holding to 26.7 per cent.

Lion Nathan is still Montana's largest shareholder with a 62 per cent stake. But it is effectively blocked from undertaking any major corporate acquisitions or takeovers without first getting Allied's approval.

Even if Lion lifts its own holding it cannot now muster the 75 per cent threshold needed to command control of the company's future.

Yesterday, Allied Domecq indicated it was prepared to press its advantage. Allied's corporate affairs director Jane Mussared acknowledged a commercial solution would have to found.

But while there have been behind the scenes talks, both parties may yet reserve their positions until the Stock Exchange's standing committee issues a ruling which will determine whether Lion Nathan broke regulations in its past acquistion of Montana shares.

Lion Nathan chief executive Gordon Cairns yesterday attacked the Montana chairman for selling his stake to Allied and "taking a cheque for $150 million and leaving minority shareholders behind."

"Since February, Mr Masfen in his role as Montana chairman, was recommending the Allied bid on the basis that it would allow all shareholders to participate," Mr Cairns said.

He said Mr Masfen's action appeared to be at odds with his commitment to selling only if all minority shareholders were taken out in a bid for 100 per cent of Montana.

But Mr Masfen, speaking from Berlin, responded that the actions of the Montana non-executive directors during the long takeover battle had ensured the share price rose to the advantage of the minorities. The price Allied paid for his stake was less than that Lion paid to acquire its most recent parcel, he said.

Both parties confirmed that JB Were had approached Lion on Mr Masfen's behalf on Wednesday to see if it would take Masfen Holdings' stake.

Mr Cairns said Lion Nathan had suggested that, given Mr Masfen's stance on minority shareholder's rights, the stake should form part of an offer which would also include the remaining minority shareholders.

JB Were was told the issue would be discussed at yesterday's Lion Nathan board meeting in Sydney. But the broker auctioned the parcel directly to Allied instead of waiting for the Lion board to declare its viewpoint. Mr Masfen said he had not been privy to the negotiations.

Mr Masfen may have sold down his shareholding to virtually zilch, but he has no intention of bowing out prematurely from the Montana chairmanship while the Stock Exchange investigation has yet to be resolved.