Australia: Takeover Panel rejects Lion Nathan application on Coopers bid

Lion Nathan Ltd attacked on September 22 the board of takeover target Coopers Brewery over what Lion Nathan described as Coopers "unusual" approach to the sales process for Coopers shares, according to Asia Pulse’s statement.

Australia's Takeover Panel said it has rejected an application for it to act on alleged misleading statements made by Coopers Brewing Ltd directors relating to a A$352 mln bid for the brewer by Lion Nathan Ltd., according to AFX publications from September 23. The panel said it dismissed Lion Nathan's application because it believes Coopers' 117 shareholders are unlikely to have been misled by their board.

Beer maker Lion Nathan, 46 % owned by Japan's Kirin Brewery Co, has made a $A352 million ($US267.91 million) takeover bid for Coopers, offering $A260 ($US197.89) per Coopers share, which Cooper's has rejected as opportunistic.

In the past few weeks, the two companies have been arguing over a pre-emptive rights regime which determines the process of how the shares are sold, the order in which shares up for sale are made available to buyers, and sets a "fair value" for shares if there is disagreement between a seller and purchaser on price.

Under the Coopers constitution, shares up for sale must first be offered to another Coopers shareholder or relative, secondly to AMP or any other Coopers employee superannuation fund, and thirdly to Lion Nathan.

Lion Nathan said on September 22 that the Coopers board believed that it could determine to whom Coopers shares were sold. Lion Nathan also said that the Coopers board believed it was not required to sell to a purchasing shareholder who is willing to pay the highest price.

"Coopers has advised the (Takeovers) Panel that it considers that the board of Coopers has a discretion as to whom it seeks to have the shares sold to under the pre-emptive rights regime and that discretion does not require it to have the shares sold to a purchasing member who is willing to pay $A260 ($US197.89)," Lion Nathan said in a letter to Coopers shareholders today.

Lion Nathan chief executive Rob Murray said in a separate statement that this was "unusual". "It seems extraordinary, and surely not in the best interests of all shareholders, that the board of Coopers should believe that it has the right to apportion shares offered for sale to whomever the board chooses and based on no pre-determined criteria," he said.

"Given that many members of the Coopers board themselves hold shareholdings, it certainly seems an unusual governance arrangement." Lion Nathan said it was unclear what criteria the Coopers board used in the past to determine which shareholders could buy shares up for sale. Coopers was not immediately available to comment.

Earlier this month, the South Australian Supreme Court ruled in Coopers' favour in its attempt to remove Lion Nathan's pre-emptive rights to buy Coopers shares. The court ruling must now be put to a meeting of Coopers shareholders if the rights are to be removed, but Lion Nathan is appealing the court ruling. The pre-emptive rights were granted to Lion Nathan in 1995 in exchange for a 19.9 per cent stake in Coopers that Lion Nathan held following the purchase of the South Australian Brewing Co.

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