Coopers Faces Takeover
Lion Nathan plans takeover bid for Aussie craft brewer
Australian beer company Lion Nathan Ltd. announced today it plans to make a takeover bid for South Australia-based Coopers Brewery Ltd., valuing the unlisted company at $266 million.
"Coopers has a number of quality brands, including Coopers Pale Ale and Coopers Sparkling Ale. These brands are highly complementary with Lion Nathan's beer brand portfolio, which includes Tooheys, West End, Hahn, Heineken, Becks and James Squire," Lion Nathan Chief Executive Rob Murray said in a statement.
There was no immediate comment from Coopers, which is a tightly held company of 117 shareholders. Lion Nathan already holds a 19.9 percent stake in Coopers.
Cooper’s has been available on and off in the U.S. market, and was one of the first high quality and bottle-conditioned beers prior to the advent of the domestic craft beer scene.
Coopers Rejects Offer
Coopers Brewery has stated that they intend to fight the takeover bid for the company from fellow Australian brewer Lion Nathan. They brewery announced today that its board had unanimously rejected an offer of A$260 a share.
"It is the unanimous recommendation of the board to reject the opportunistic Lion Nathan offer. The board strongly advises shareholders to take no action," a spokesman for Coopers said after a board meeting at the company.
Yesterday, Coopers notified for the country’s Takeover Panel to get involved in the acquisition fight.
The Takeovers Panel has received an application from Coopers Brewery seeking “a declaration of unacceptable circumstances in relation to Lion Nathan’s conduct under section 657A of the Corporations Act and final orders”.
Lion Nathan Increases Pressure on Cooper’s
Lion Nathan is increasing its effort to acquire Coopers Brewery. Lion Nathan filed an application with the Australian Takeovers Panel, seeking a declaration of unacceptable circumstances.
In the application, Lion Nathan alleging that the Coopers’ board has made a number of conflicting statements which, when considered in combination and prior to the issue of full information in the bidder’s statement and target’s statement, are misleading and likely to confuse Coopers’ shareholders as to the value of their shares.
The Panel said it has not decided whether to conduct proceedings in relation to the application and made no comment on the application’s merits. It also noted that it has not received submissions from the other parties to the application and it is, therefore, unaware of their views.
The trans-Tasman brewer's application follows one lodged with the panel last week by Coopers, seeking a similar declaration
Effort to Stay Independent Continues
In an continuing effort to remain independent, Cooper’s has called for an early hearing of Lion Nathan’s appeal to a South Australian Supreme Court ruling that removed Lion’s third-tier pre-emptive right to buy Coopers shares when they came up for sale.
Coopers wants the appeal to be heard as soon as possible, and, if it is successful in defending its position, it will hold a general meeting to change its constitution to block Lion’s takeover.
The change in Cooper’s constitution will require 75% support from shareholders
Lion Wins Latest Round
Coopers Brewery was dealt a double blow in its fight to remain independent. Lion Nathan, won a legal case in the Federal Court of Melbourne and claimed it had support for its offer from shareholders with an 11% interest in Coopers.
The Federal Court in Melbourne has granted an injunction preventing Coopers Brewery from holding an extraordinary general meeting aimed at removing Lion Nathan’s pre-emptive rights to Coopers’ shares.
The decision is a significant victory for Lion Nathan, which launched a hostile takeover bid for Coopers last month.
Accusations Continue to Fly
Coopers Brewery has said Lion Nathan has acted hysterical, and tossed other accusations in the vicious battle for control of the South Australian brewer.
In a statement last week, Coopers said Lion Nathan was "desperate to get control of Coopers" because Lion's Australian growth was flagging.
"We have been told that Lion Nathan's growth forecasts are not good and that it panicked when Coopers sought to have Lion Nathan removed from its constitution, and this is the reason why it is acting in such a desperate way," managing director Tim Cooper is quoted as saying.
Coopers also said the actions of Lion Nathan during the Kirin partial takeover of Lion in 1998 showed it had a poor corporate-governance record.
Coopers criticized Lion Nathan having structured a share-acceptance offer for 45 per cent of Lion's stock on a first-come, first-served basis, rather than pro rata.
It alleged this enabled some shareholders to sell their shares while others, not able to react on that day, missed out.
The Coopers attack follows calls from Lion for Coopers to explain a 2000 deal between Coopers and Industrial Equity Limited.
Coopers is yet to respond to Lion's calls for an independent inquiry into the matter.
Meeting of the Minds
The war is bitter but the first face-to-face skirmish was a gentlemanly affair.
Paul Evans, a representative of Lion Nathan, and Coopers managing director Tim Cooper happily shook hands as the South Australian brewer's shareholders met for the company's annual meeting yesterday.
Off the agenda were the most controversial issues facing shareholders -- whether to strike out Lion's share-buying rights and whether to support a company buyback regime proposed by Coopers directors.
But those issues, scheduled to be put to the vote at an extraordinary meeting of Coopers shareholders next Wednesday, were bubbling below the surface.
Coopers chairman Glenn Cooper said funding the proposed buyback by the company of up to 15 per cent of shares at $260 a share would force the company $53 million into debt.
But he was "comfortable" with this level of debt and said there were plenty of institutions ready to lend Coopers the money.
He emphasized Coopers' solid financial performance in which it enjoyed a 52 per cent increase in profit after tax and interest last financial year to $14.4 million on sales of $126.6 million.
Mr Evans, who along with Lion Nathan strategy adviser Nicholas Gray attended the meeting as proxy representatives of dissident shareholders, said they had observed rather than participated in the meeting.
But other shareholders had expressed a number of concerns, he said.
"Concerns were raised over the debt levels Coopers may have to go into to fund future buybacks," he said. "Also the possible tax treatment of shares that are put into any future buyback. And thirdly the lack of an independent director to represent the interests of minority shareholders."
He said Lion Nathan was still convinced its offer of $310 a share was "compelling" and that shareholders would realise the continuing presence of Lion within the share-buying regime was having "a very positive impact on the price of Coopers shares".
Lion may roll over
Lion Nathan has announced that it will not extend its bid for Coopers Brewery beyond the March 20th deadline.
The brewer and wine producer said today that it would not extend its $317 million bid at acquiring the family-owned company, having gained just 0.7% of Coopers.
The bid for Coopers looked to have been defeated in December, when Coopers shareholders voted to strip Lion Nathan of its pre-emptive rights, effectively blocking it from buying any shares.
In January, however, Lion chief executive Rob Murray said that legal action was under way that could keep the company’s bid afloat.