Masfen 'brought in white knight for Montana' say brokers

Friday 9th February 2001

LION TAMING? Montana chairman Peter Masfen sent his broker worldwide to find an alternative buyer

By Nick Stride

An international search for a white knight is thought to be behind the eruption this week of a bidding war for winemaker Montana.

As The National Business Review went to press Britain's Allied Domecq had not yet responded to a $4.65 a share bid from brewer Lion Nathan, which topped Allied's surprise $4.40 offer.

The latest Lion bid values Montana at almost a billion dollars, more than twice the value the market placed on the winemaker only a year ago.

Montana's board meets today to consider the rival bids. Lion has 28% of Montana and has regulatory clearance to go to 51%.

Manoeuvring behind the scenes is Montana chairman Peter Masfen, who holds 20% of the company. Mr Masfen said yesterday he would not be commenting on the Lion bid.

Mr Masfen last year matched Lion's "notice of intention" to buy a controlling 51% stake at prices between $3.20 and $3.80.

But many in the financial community doubted he would be able to come up with the cash to fight Lion if it translated its intention into an actual bid. To lift his stake from 20% to 51% would have cost him between $213 million and $253 million at the prices indicated.

Analysts believe Mr Masfen, who has always been seen as reluctant to see the company fall into Lion's hands, sent his sharebroker, JB Were, on a worldwide search to find a more acceptable buyer.

They pointed to links between J B Were and Allied's broker, Goldman Sachs.

Earlier this week he indicated he would accept Allied's $4.40 bid for his shares.

He and fellow directors had warmly recommended the bid to other shareholders, saying Allied's scope and scale around the globe would accelerate Montana's development.

The Lion counterbid put him in a difficult position, brokers said. Were Lion to reach 51% his stake would lose its "strategic value" premium.

Much the same situation applied to Lion. Had it relinquished Montana to Allied at $4.40 it could have realised a quick profit of around $120 million.

It has chosen to fight on and risks being left in a minority position with a stake of much-reduced value.

Also driving the Montana bidding war is the government's intention to enact the Takeovers Code later this year. That will mean bidders will be able to buy only 19.9% of a company's shares without making a full takeover offer at the same price.

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