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Lion sticks with original Montana price

By Phil Boeyen, ShareChat Business News Editor

Friday 15th December 2000

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Lion Nathan (NZSE: LNN) isn't stumping up with a revised price range for Montana (NZSE: MON) shares despite an appraisal report which claimed the brewer's $3.20 to $3.80 offer is unfair.

Lion has dismissed the PricewaterhouseCoopers' valuation range of $4.16 to $4.64 a share and says its indicative bid range for up to 51% of Montana shares remains unchanged.

Lion CFO, Paul Lockey, says the company has studied the report further since its release earlier this week and still believes the valuation range is highly ambitious.

"The mid-point of the appraisal report range represents a multiple of 14 times F01 EBITDA which is some 40% ahead of Australasian comparables and historic multiples."

He says given Montana's reduced liquidity, with 48% currently held by just two investors, in the absence of a higher bid, Montana shares are likely to trade below the valuation range.

"With a strategic stake, we can afford to be patient about building our shareholding if need be while we examine a number of additional opportunities to expand our involvement in the Australasian wine industry. Always providing they make good investment sense."

Lion's restricted transfer notice to buy Montana shares commences today. The shares closed at $4.05 yesterday but have fallen below $4.00 in trading this morning.

It is yet to be seen if Montana executive chairman Peter Masfen believes his company is worth the price range indicated by PricewaterhouseCoopers.

Masfen Holdings also has a restricted transfer notice in the same price range as Lion, due to commence on December 27th, but has not commented on the appraisal report.

Masfen Holdings currently holds 19.9% of Montana and Lion has a 28.2% stake.

In backing up the company's valuation the appraisal report said "Montana has a unique and virtually unassailable market position as a producer of New Zealand wine" and also claimed that cost-savings and synergies from the purchase of Corbans are likely to be greater than first thought.

The report also said that any financial forecasts for Montana were more likely to be understated than overstated.

Montana's independent directors, who commissioned the report, have recommended shareholders not sell their shares in the price range indicated by Lion and Masfen Holdings, and say they believe there is "potential growth in the value of Montana shares beyond the upper end of the valuation range derived by PricewaterhouseCoopers and set out in the appraisal report".

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