Australia: Lion Nathan drops Independent Liquor bid

Lion Nathan, Australia's second-largest brewer, dropped out of the race for privately-held New Zealand drinks group Independent Liquor Ltd., saying it could not justify raising its bid, reportedly around NZ$1.15 billion, Reuters announced December 11.

Disappointed investors sent shares in Lion Nathan down as much as 5 percent.

"Discipline is good. But Lion Nathan does need to identify a significant acquisition. They have a stalled wine strategy and they need to make that division a significant part of Lion Nathan," said Shaw Stock broking analyst Scott Marshall.

UBS, advising on the sale, declined to comment on a newspaper report that private equity firm CCMP Capital Advisors and a rival joint venture between Pacific Equity Partners and Nikko Principal Investments (8603.T: Quote, Profile, Research) had sweetened their offers to as much as NZ$1.3 billion (A$1.15 billion, US$906 million).

Lion Nathan would not comment on whether it dropped out at around NZ$1.15 billion, as reported by the Australian Financial Review.

The group, 46 percent owned by Japan's Kirin Brewery Co., said it was still well placed to achieve higher, sustainable earnings growth from 2008.

"Our focus is very much on adding value to Lion Nathan shareholders and our judgement was that an acquisition above our offer price would not achieve that," Lion Nathan Chief Executive Rob Murray said in a statement on Monday.

Lion Nathan's shares sank as low as A$7.69 and by 0036 GMT were down 2.2 percent at A$7.92 in a market that was up 0.4 percent.

Lion Nathan mainly competes in Australia against Foster's Group Ltd. and in New Zealand against DB Breweries Ltd., a unit of Asia-Pacific Breweries, and has this year launched an expansion drive into spirits.

The company, the dominant liquor group in New Zealand with beer brands such as Lion Red, Steinlager and Stella Artois, has warned higher commodities prices and business reorganisation costs would hit fiscal 2007 earnings growth.

Murray said it would now focus on innovation in its core beer portfolio, and expand in spirits and ready-to-drink products.

Independent was put up for sale after founder Michael Erceg died in a helicopter crash in November 2005.

It makes Haagen beer and imports beers including Carlsberg, Tuborg and Grolsch. Its products include ready-to-drink Woodstock Bourbon & Cola and Kristov Vodka Cruisers.

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