Yes, there's a doctor in house

Tim Cooper will need steady hands and strong nerves to keep the family business out of Lion Nathan's grasp. Picture / News Ltd

Dr Tim Cooper isn't easily shaken. His medical training prepared him to handle most things, from running Australia's last family-owned brewery to fighting off a formidable rival in a takeover attempt that's become savage.

Lion Nathan, Australia's second-largest brewer, launched a A$352 million ($387 million) bid for Coopers Brewery on September 1.

Like a surgeon, Cooper is self-assured, calm and strikingly mild-mannered when speaking about an issue that threatens the independence of the 143-year-old brewer.

It could be that the Coopers just aren't used to losing, given that the company has struggled for survival before. There were times when the brewery's death rattle was deafening, certainly in the 1970s as Australia's excise tax crippled the beer industry and, more recently, in the 1990s when the recession made premium beer drinkers reach for cheaper suds.

"The best resolution would be for Lion Nathan to drop their intention to try and take us over and to let us remain an independent company," said Cooper from the brewery's headquarters in the Adelaide suburb of Regency Park.

That's unlikely. Three separate legal actions are afoot in South Australian and Victorian courts. One of the latest has Lion Nathan seeking a court injunction to stop Coopers' shareholders from voting to make it takeover-proof.

There's no doubt the two companies have had a history dating back far longer than is widely known.

Cooper gives credit to Lion Nathan for his brewery's steady growth. If it weren't for Lion Nathan selling off the hotel properties it inherited with its purchase of the South Australia Brewing Co in 1993, Coopers and rival Foster's wouldn't have made such easy inroads into the on-tap beer market in the late 1990s.

Once the hotels were freed from Lion Nathan's grasp, Coopers brands such as Sparkling Pale Ale and Original Pale Ale began flowing from hotels' taps like never before.

Coopers' reach grew and its beer became so popular that it ran out of capacity at its brewery in Leabrook, another Adelaide suburb. The company, which at that time was headed by Tim's father, Bill Cooper, made the decision in 1998 to buy the new brewing site in Regency Park.

Bill Cooper approached Lion Nathan around that time to ask whether it would think of selling its Southwark brewery to Coopers, which in turn would brew Lion's beer and use the new site as a distribution centre.

Tim Cooper said Lion Nathan declined to sell Southwark, citing marketing reasons. The Coopers built the Regency Park brewery instead, at a cost of $40 million.

Foster's is now Australia's largest beer company with 54 per cent of the national beer market, compared with Lion Nathan's 42 per cent and Coopers 2.5 per cent share. Coopers' biggest stake, and likely the most valuable to Lion Nathan, is its 24 per cent beer stake in South Australia. That stake is set to grow like gangbusters.

"You could say in an indirect way Lion Nathan helped us by that decision which turned out to be not quite such a good decision for them," said Cooper, who left his medical practice, studied brewing science and returned to the family business just as its fortune was turning.

Cooper's father filed a suit in 2002 to remove Lion Nathan's third-tier pre-emptive rights. Coopers' constitution says that if any of the 117 shareholders want to sell their stock they must first offer the shares to other shareholders. If no one buys them, the superannuation fund, run by the AMP, must be offered the chance to buy. If AMP does not elect to buy then the third tier pre-emptive rights allow Lion Nathan to purchase Coopers shares.

Last month, Coopers won its case to have those pre-emptive rights removed. Coopers' main legal argument was that Lion Nathan lost entitlement to the rights when Japan's Kirin Brewery bought a 46 per cent stake in Lion in 1998. Lion Nathan, in turn, has lodged a formal appeal to the Supreme Court of South Australia to preserve them.

But Cooper jnr said his father's decision to try to remove Lion Nathan's rights was not an act of retribution or the result of a grudge against Lion Nathan.

In fact, Cooper distinctly remembers a meeting with Gordon Cairns, Lion Nathan's former chief executive, in Sydney two years ago, when Cairns asked him whether the suit resulted from something personal.

"I said absolutely not. From time to time, I enjoy drinking Hahn and other Lion Nathan beers. I know quite a number of the brewers there and I think they're nice people," Cooper told Cairns at the time.

Cairns has since been replaced by Rob Murray. Cooper also made it clear to Cairns that the family wasn't getting set to sell the company to another brewer or anyone else.

Cooper remains confident that no matter what legal challenge Lion Nathan launches, Coopers shareholders will ultimately have their say. Shareholders are set to decide once and for all on October 20 whether Lion Nathan's pre-emptive rights for the shares should be removed. To pass, the vote has to be approved by 75 per cent of shareholders. However, Lion Nathan's injunction to stop that vote is yet to be heard.

The Australian press has spilled much ink over divisions within the Cooper clan. Mary Phyliss Henderson, an Adelaide socialite and member of the Cooper family, is set to sell her 8.5 per cent stake to Lion Nathan. However, the ownership of that stake, which was left to Henderson in her late aunt's will, is being legally contested by other Coopers, including Tim. The matter of the will has been before the courts since August 2003 and as yet is unresolved.

Cooper contends that deep divides within the clan are blown out of proportion. "I think too much has been made of the fact that some minority shareholders have indicated that they would possibly be interested in selling. So far, only one of them has put in a share transfer notice, so you could hardly say there is any significant fracturing on the basis of one shareholder putting in a transfer notice out of 117."

Lion Nathan has maintained it was approached by several shareholders looking for more liquidity in their shares.

Cooper said most shareholders would not want to sell. It is estimated that the Coopers board and immediate family hold more than 50 per cent of the shares, and the rest by people with a family connection.

He is convinced that in the family's hands, the company's market share will continue to grow.

Cooper recalls a time when the family-run brewery wasn't such a hot prospect.

"We were a funny, little old brewery in the eastern suburbs of Adelaide, which if any of the other brewers came to they would think it was a quaint, old spot."

With turnover in excess of A$100 million a year, a flash new brewery and traditional beer brands that Aussies are lapping up, Coopers isn't likely to enjoy such a private status ever again.