Philip Bowman: Allied's offer "far superior"

Allied's purchase of winemaker Montana Group would help the UK drinks giant fulfil expansion plans for its wine division.

Allied, the world's second largest spirits firm, on Friday added California winery Buena Vista to a wine portfolio including Napa Valley enterprise William Hill, Marques de Arienzo in Spain, and the Balbi vineyard in Argentina.

"The objective has always been to gain full 100% ownership of Montana," a company spokeswoman said.

But Lion Nathan, owner of brands including Castlemaine XXX and Toohey's, is thought to retain a keen interest in Montana, despite being forced to reduce its shareholding from 62% to about 43%.

Lion, controlled by Japanese brewing giant Kirin, is already New Zealand's largest brewing company.

Stock exchange probe

Lion was on Friday given 30 days to dispose of the holding after an investigation by the New Zealand Stock Exchange into the way the shares were acquired during an overnight raid in early February.

Lion bought the stock shortly after topping an offer by Allied Domecq of 4.40 New Zealand dollars (NZ$) per Montana share.

Typically, Lion would have been forced to delay the purchase to give Allied time to respond, and to provide small shareholders with an opportunity to benefit from the rival offer.

Lion, which had said it would be happy to sell 10% of its holding, and which has expressed ambitions to purchase just 50.1% of Montana, is reported to be considering its options after last week's sell ruling.

Lion chief executive Gordon Cairns said he was "extremely disappointed that the committee had imposed such a severe penalty instead of an appropriate remedy for what was, at worst, a technical breach of the stock exchange rules".

Head start

Mr Cairns in August secured a position on Montana's board after Lion became the largest shareholder in the wine firm.

Allied in February opened its own bid for Montana, after dropping out of the auction for Seagram's drinks portfolio, a move observers speculated left it with cash to fund other acquisitions.

Allied, which owns 27% of Montana, has filed a notice promising to buy a further 23% at NZ$4.80.

Lion on Monday said it planned to renew its bid for Montana at NZ$3.70, if it succeeds in acquiring an initial 11% of stock at NZ$5.50.

But Allied Domecq's chief executive Philip Bowman said his firm's offer was "far superior".

"We believe... that Allied is by far the better partner for Montana going forward," he said.

In the City, Allied shares closed 3.25p down at 440p on Monday.