Montana to add brand muscle to Corbans

By Nick Stride

Friday 22nd September 2000

SYNERGIES: Montana expects strong savings from Corbans merger

Montana Wines expects to make strong savings by combining its business with Corbans Wines but the details won't be known until Christmas.

"Certainly there are synergies," managing director Peter Hubscher said as Montana this week unveiled the $151 million acquisition.

"We expect to make some good savings but we need to get in there and have a good look around."

Corbans has sales of about $100 million and Montana reported revenue of $450 million for the June year. But Mr Hubscher said combining the companies could produce revenues higher than the sum of those two figures.

"We'll have to look at the mix. Montana has very strong brands but a shortage of supply. Corbans has weaker brands but their supply is more than adequate. They've been selling us bulk wine for some years," Mr Hubscher said.

"If we sell some of their products through our brands we might get a higher price overseas."

In the key British market New Zealand gets the highest per-litre price of any wine-producing country, fetching £5.50 compared with Australia's £4.44 and France's £3.69.

And Montana, Mr Hubscher said, has the highest average selling price in the New Zealand industry.

Deutsche Securities analyst Warren Doak said the acquisition would add upwards of $12 million to Montana's earnings before interest and tax, "but how far upwards remains to be seen."

The industry is expecting some redundancies.

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