Forum Archive Index - May 2001

["DR" <kat47@bigfoot.com>]

Note the last line from the FT   

 

Lex comments on Allied Domecq (LSE: ALLD.L - news) s (ALLD) habit of pulling corporate rabbits out of hats. It is now in a tussle with Lion Nathan for Montana, New Zealand's biggest winemaker. Splurging £50m on a further 16.3 per cent of Montana, when Lion already has 62 per cent, may look rash. But given the thirst of the world's big drinks groups for fast-growing wine assets, it was worth a shot. Allied's previous 10 per cent made it merely a thorn in Lion's paw. With 26.7 per cent, it can block resolutions, on issues such as asset sales or mergers, which require 75 per cent support from shareholders - in effect, depriving Lion of full control. But New Zealand's market surveillance panel is investigating whether Lion broke stock exchange rules in the way it bought some Montana shares in February, when it took its stake to 51 per cent - which Lion denies. If Lion is forced to surrender all or part of its stake, Allied is well placed to take its own stake above 50 per cent. Even if Lion is cleared, the two bidders probably have to negotiate a solution, perhaps carving up Montana. Opening up those possibilities was worth the roughly 10 times historic earnings before interest, tax, depreciation and amortisation - adjusted for a recent acquisition - Allied paid for its stake. Future efforts to stock up its wine cellar are unlikely to come so cheap.