Australia: For Lion Nathan the battle for Coopers it’s not over yet, the brewer raises its bid

Lion Nathan Ltd, Australia's second-largest brewer, raised its bid for unlisted rival Coopers Brewery Ltd. by nearly a fifth on Monday, valuing the South Australian company at A$420 million ($307 million), Reuters reported on November 21.

Coopers advised shareholders to wait for the board's review of the increased offer to A$310 a share from its previous A$260. "I think (Lion Nathan Chief Executive) Rob Murray's expectation that the Coopers board must now recommend the offer is disingenuous in the extreme," said Coopers Managing Director Tim Cooper."Lion Nathan has also not said that its offer is final."

Industry analysts said the raised price would put pressure on Coopers to accept the bid, but it was still not clear that it would gain acceptance from the board.

"You can hold out for so long, but they would be finding it increasingly difficult to not recommend it," F.W. Holst & Co. analyst David Spry said. Lion Nathan said Coopers shareholders would be able to keep a final dividend of A$3 a share, taking its new offer to A$313 a share.

The raised bid falls within the A$284 to A$320 a share valuation range included in an independent experts' report commissioned by Coopers. But Coopers said in its takeover defence documents that if Lion Nathan were to pay the same earnings multiple as in other similar beer and wine industry transactions, then an offer price of more than A$360 a share would be justified.

The company has also announced its own plans for a A$260 a share buyback and told its
shareholders that it planned future buybacks at higher prices if Coopers could continue to increase its profits.

The increased offer comes ahead of a Coopers shareholder meeting on Tuesday next week to vote on the removal of Lion Nathan's pre-emptive rights, which rank behind existing Coopers shareholders and superannuation interests. As a holder of pre-emptive rights, Lion Nathan is also exempt from a company constitution rule that prevents the sale of shares to a competitor.

Removal of its rights would effectively end the bid. Lion Nathan Chief Executive Rob Murray said Coopers shareholders should vote against the removal of its rights, even if they did not plan to accept the current offer.

"Without Lion Nathan they risk permanently and significantly reducing their, and future generations, ability to achieve a sale of their shares at a compelling fair market value," he said in a statement.

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