Australia: Coopers is determined to fight Lion Nathan’s takeover bid

Australia's Coopers responded to the takeover intentions of Lion Nathan. The managing director of the target company said 2 that Lion Nathan bid for family-owned Coopers Brewery is unlikely to win it controlling stake, Reuters announced on September 2.

"We don't really think Lion Nathan could be serious in thinking they are going to get control of our company," Tim Cooper affirmed. "This comes after a number of approaches from Lion Nathan to us to request our involvement in joint ventures and arrangements with them, none of which really made commercial sense to us."

The company has about 117 shareholders and Cooper, the great-great-grandson of founder Thomas Cooper, said directors would meet early next week to respond to the bid. "I would not want to prejudge their view, but certainly the directors have rebuffed Lion Nathan in its previous approaches so that is a good indication for you," he said.

Cooper said the board and their immediate family held more than 50 % of Coopers, and about 90 % of the firm was owned by people with at least some family connection.

"They by and large inherited their shares, so they see it in a custodial way," he said. "They look at them as shares they inherited and will pass on to the next generation."

Coopers holds a 25 % share of the beer market in its home state of South Australia and around 1-3 of the national market. Lion Nathan, whose major rival is Foster's Group Ltd. has about 43-44 % of the national market. Its South Australian brewery's brands include West End, while it also makes Tooheys, XXXX, Hahn and James Squire.

Analysts said Lion Nathan was aiming to bolster its offering at the higher-margin premium end of the beer market, and the Coopers brands had shown good growth.

Cooper communicated that Lion Nathan in the past suggested arrangements where Coopers would brew Lion Nathan beers and Lion Nathan would distribute the Coopers brands across Australia. "Our beers tend to compete more in the premium beer market," he said. "We didn't feel it would be good for promoting the image of our beers. From that point of view it didn't make commercial sense to us."

Lion Nathan said on Friday it already had acceptance from one shareholder, subject to pre-emptive rights issues. It has not set a minimum acceptance level for its bid. "Lion Nathan has received strong feedback that there are a number of shareholders frustrated by the lack of liquidity in Coopers shares," Chief Executive Rob Murray said in a statement.

Lion Nathan possessed a 19.9 % stake in Coopers through its purchase of the South Australian Brewing Co., but it relinquished the stake in 1995 in exchange for pre-emptive rights over the sale of Coopers shares, except in certain circumstances.

Those rights are now the subject of legal battles, with South Australia's Supreme Court on Friday ruling in favour of a Coopers claim that Lion Nathan's rights were no longer valid due to Kirin's shareholding.

Lion Nathan said it would appeal the decision, which it said would have no effect on its offer. The bid for Coopers also depends on Australian Competition and Consumer Commission approval, which analysts think about it could be an issue in South Australia.

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