Australia: Coopers and Lion Nathan dispute in hostile bid

Coopers Brewery has accused Lion Nathan of trying to pressure accountants KPMG into giving a valuation of the Adelaide brewer that would support Lion Nathan's hostile A$352 million A$260-a-share bid, The Age commented on November 11.

Coopers has also responded to Lion Nathan's allegations that Coopers directors had increased their stake in the company by loading up on what would now be considered cheap shares.

In its counterblow, it has accused Lion Nathan chairman Geoffrey Ricketts of making A$31 million on the sale of 45 per cent of Lion Nathan to Japan's Kirin Brewery Company in 1998, leaving other investors high and dry.

In a letter seen by The Age, lawyers for Lion Nathan wrote to KPMG warning that its "fair value" determination of Coopers' Brewery could not be any less than A$260. The letter from Malleson Stephen Jacques, dated September 6, just days after the bid was announced, said Lion Nathan was concerned to ensure that "the assessment is conducted according to law and with due process".

"We put you on notice that our client will take whatever steps it considers necessary in this regard, including court proceedings (which may involve shareholders) to ensure that the valuation is conducted properly according to law," the letter said."If the assessment is not conducted properly according to law, our client will hold KPMG liable for any loss suffered (both direct and indirect, including loss of opportunity)."

The letter was written after Coopers had told its shareholders that a "fair value" assessment from KPMG might produce a different price from Lion Nathan's offer, and that shareholders would have to sell at the revised price. KPMG subsequently valued the company at $260 a share, now the price of the Coopers buyback.

Coopers managing director Tim Cooper said: "We just don't think it's right to say at the start of the process: 'We'll sue if you don't come up with $260'."

Coopers has also accused Lion Nathan of treating its own shareholders badly when Lion Nathan's then chairman Douglas Myers and his fellow directors sold almost all of their shares to Kirin in a one-day, first-come, first-served basis, allowing them to pocket most of the takeover premium while other shareholders did not get an opportunity to sell.

While this would have been illegal under Australian law, it was allowed in New Zealand which was then Lion Nathan's home base.

Dr Cooper said Lion Nathan was getting desperate and its actions raised serious questions about its professionalism and corporate governance. But Lion Nathan said Coopers was trying to hide its own corporate governance issues.

A Lion Nathan spokesman said: "It's an intemperate outburst that suggests Coopers is feeling the pressure and they are trying to direct attention away from serious questions about their own corporate governance including the IEL (Industrial Equity Ltd) transaction and share trading by their own directors, questions that need an answer."

The allegations about IEL centre on claims that Coopers had made a payment to IEL that enabled IEL to obtain a price for its Coopers shares far higher than that available to other Coopers shareholders.

Lion Nathan said the letters to KPMG were not extraordinary as the accountants were just being told they were expected to follow the law.

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