Australia: Lion Nathan looks for legal way to stop the extraordinary meeting at Coopers

Lion Nathan is considering legal action to try to stop a critical Coopers Brewery extraordinary general meeting to be held on October 20 in Adelaide during which the shareholders will try to remove the pre-emptive rights of Lion Nathan to buy shares from the company's constitution, according to a report of Australian Financial Review of September 27.

The meeting notice was sent to Coopers' 117 shareholders late last week with an explanatory memorandum. But Lion is assessing its legal position and might move to try to delay or stop the meeting being held.

Lion chief executive Rob Murray said: "We're considering our legal options." He also said Lion was content with its current position in the takeover battle, which started on September 1 with a bid of A$260 a share, valuing Coopers at A$352 million. "We're comfortable with our level of progress."

Lion does not own any Coopers shares but one Coopers shareholder lodged a transfer notice in the hours before the bid was announced for 6000 shares to be sold to Lion. Lion also has several pre-bid agreements from other Coopers shareholders willing to sell, subject to the dispute over pre-emptive rights being resolved.

More than 75 per cent of Coopers shareholders must vote in favour of changing the constitution at the meeting for the push to remove Lion to succeed. Under the Coopers constitution, if one or more of the 117 Coopers shareholders wants to sell out, they must first offer the stock to other Coopers shareholders.

If no one elects to buy those shares, then AMP, which runs the Coopers superannuation fund, must be offered the shares next. If AMP decides against taking up the shares then Lion, with third-tier pre-emptive rights, must be offered the shares.

It is those third-tier rights that are the subject of an appeal by Lion to the Full Court of the Supreme Court in South Australia after a decision went against Lion in a decision handed down by Justice John Perry on September 2.

The Coopers explanatory memorandum for the October 20 meeting states that if Lion's appeal in the Supreme Court is successful, any resolution passed at the meeting on pre-emptive rights "would be of no effect" and be made null and void.

A change in the constitution would in effect lock out Lion or Foster's Group from ever being able to buy shares in Coopers without the consent of Coopers directors.

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