Double trouble brewing for Lion's bid

Discussion of Lion Nathan's failed takeover bid for the independent Cooper's Brewery and links to articles and other discussions.

Double trouble brewing for Lion's bid

Postby Oliver » Saturday Nov 12, 2005 10:02 am

Two articles on Cooper's $260/share buyback

http://theaustralian.news.com.au/common ... 43,00.html

Double trouble brewing for Lion
Blair Speedy
November 09, 2005


COOPERS is expected to value itself at more than double Lion Nathan's hostile $352 million takeover offer when the brewer releases its target statement rejecting the bid next week.

Coopers has calculated Lion could save more than $20 million a year by merging its South Australian brewing operations with Coopers, which, coupled with a premium for control and the added liquidity benefit of Lion's listed structure, is expected to give a target price of between $500 and $600 per share, dwarfing Lion's $260 per share offer.

Coopers on Monday unveiled plans to conduct a buyback of up to 15 per cent of issued stock at $260 per share, angering Lion Nathan, which said the buyback offer would never have been made if not for Lion's bid.

"Coopers have rejected our offer at $260 per share, and yet they have now proposed to buy back shares at the same price," Lion chief executive Rob Murray said. "The proposed buyback at $260 per share is a very clear endorsement of Lion Nathan's offer price."

However, Coopers is set to extend the buyback offer further, with plans for an annual buyback facility indexed to earnings growth, which would allow shareholders to sell for even higher prices in coming years if Coopers meets forecasts for strong growth.

The South Australian brewer hopes the plan will win back those of its 117 shareholders considering accepting Lion's offer out of fears they will never have the chance to sell their stock at such an attractive price.

The most recent buyback for Coopers shares, in 2003, was conducted at just $45.01 per share, a "fair" price set by accountancy firm KPMG.

The new buyback, which is subject to shareholder approval, has also been priced by KPMG.

However, this time the firm was operating under the watchful gaze of Lion Nathan, which was determined to ensure the buyback price matched its own bid of $260 per share.

The bidder was determined to ensure that Coopers was not able to cheaply buy its way out of trouble by hoovering up shares that would otherwise have been sold to Lion.

Under Coopers' pre-emptive rights regime, any shares that come up for sale must first be offered to existing shareholders and their families, then the Coopers' staff superannuation funds and then Lion Nathan.

Lion's solicitor, Mallesons Stephen Jaques, wrote to KPMG in September threatening legal action if the firm's assessment of a fair price for Coopers shares came out at less than $260.

Rather than the usual analysis of the company's financial performance, it is understood KPMG agreed to recommend the $260 per share valuation on the basis that if that was what Lion was bidding, it was fair for Coopers to make the same offer.

Coopers and Lion have as many as five cases before the courts over Lion's right to buy shares in Coopers.


http://www.theage.com.au/articles/2005/ ... 05901.html

Coopers plays $260 buyback trump
November 8 2005
By Leon Gettler, Beverages Reporter


COOPERS Brewery has moved to outflank Lion Nathan's hostile $260-a-share bid with a buyback - at $260 a share.

The offer comes days after Coopers directors told shareholders to sit tight and take no action in relation to Lion Nathan's takeover offer.

The Adelaide brewer's 117 shareholders will today receive a letter telling them of the buyback for up to 15 per cent of the issued capital as "part of the ongoing capital management policy being considered by directors".

The letter also gives notice that Coopers still plans to hold its extraordinary general meeting to remove Lion Nathan's third-tier pre-emptive rights.

Lion Nathan yesterday refused to comment on the new buyback.

But the trans-Tasman brewer could try to kill it by rolling a fresh claim into the litigation it now has under way seeking to unwind the buyback Cooper's rolled out in 2003 at $45.01 a share.

Lion Nathan might also use it as ammunition to attack Coopers' directors who had increased their stake in the company by loading up on what would now be cheap shares.

Lion Nathan has already launched court proceedings against Coopers, along with a former Coopers shareholder, Adelaide solicitor Andrew Short, over the 2003 share buyback, arguing it was unlawful and in breach of the Coopers share agreement.

Under that agreement, Lion Nathan is third in line to buy Coopers shares when they come on the market, after other Coopers shareholders, who are first in line, and then AMP, which runs the Coopers superannuation fund.

The agreement has been struck out by the South Australian Supreme Court but Coopers still has to persuade 75 per cent of its shareholders to change the company's constitution at the EGM.

Lion Nathan shares yesterday slipped 18¢, or 2.26 per cent, to close at $7.80.
Oliver
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