A vineyard too far for Lion?

By Nick Stride

Friday 6th September 2002

Eyebrows may have been raised over the price Lion Nathan has paid for Marlborough's Wither Hills but the vendors are not complaining.

Father and son John and Brent Marris were this week celebrating a $52 million pay cheque which they will share equally. They also get to keep their jobs, Brent as the company's chief winemaker and John as the viticulturalist.

The acquisition is the first New Zealand toehold of Lion's ambition to create a significant transtasman wine division.

Last year after losing a battle with Allied Domecq for Montana the company shelled out for Australia's Petaluma and Banksia Wines.

At the time Lion chief executive Gordon Cairns attacked "snivelling" criticisms he was paying too much.

The price offered for Banksia, he said, was 13.4 times projected 2002 ebitda (earnings before interest, tax, depreciation and amortisation), a multiple well within the range of recent industry transactions.

For Wither Hills Lion is projecting ebitda of $5 million for 2003 and $6.3 million for 2004, giving multiples of 10.4 times and 8.2 times, respectively. Revenue is projected to be $9.5 million in 2003 and $11.5 million in 2004.

Wither Hills last year produced 80,000 cases.

The winery has its origins in 1978 when John Marris planted contract grapes in Marlborough's Wairau Valley. Son Brent trained as a winemaker at South Australia's Roseworthy College before founding Wither Hills and merging it with his father's vineyards.

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