Australia: Coopers secures important legal victory in its takeover war with Lion Nathan

Coopers Brewery Ltd. scored on November 18 a major victory in its battle to fend off a hostile takeover bid by Lion Nathan Ltd. when a Melbourne court moved to allow an extraordinary general meeting of the target's shareholders to proceed, Dow Jones announced on November 18.

In a decision that threatens to derail Lion Nathan's A$352 million offer, the Federal Court judge Alan Goldberg discharged a temporary injunction against the planned Coopers meeting, subject to agreed undertakings to the company's shareholder documents. The privately-owned Coopers plans to hold the meeting on Nov. 29 to vote on changes to the company's constitution to remove Lion Nathan's existing pre-emptive rights to buy shares and effectively prevent Lion Nathan from owning Coopers shares.

The justice Goldberg ordered Coopers to provide more information to its shareholders on a valuation from the company's auditor KPMG. In September, Lion Nathan bid A$260 a share for Coopers. KPMG subsequently valued Coopers shares at A$190 apiece in the absence of the Lion Nathan offer, while independent expert Grant Samuel has put a value on Coopers of between A$284 and A$320 a share.

Beforeof the court decision, some analysts suggested that Lion Nathan is unlikely to secure a stake in Coopers if its pre-emptive rights regime is removed. "Unless Lion Nathan can stop Coopers from striking out its exemption..., it will not be able to hold any shares," JPMorgan said in a note to clients on Friday.

"Lion Nathan is unlikely to own any shares in our opinion," the broker said.

Meantime, in a separate legal matter related to the takeover; Lion Nathan said Friday it has sought leave to appeal in the High Court to try to overturn an earlier Supreme Court decision related to its pre-emptive rights.

Last month Coopers successfully applied to cancel a decade-old agreement that gives Lion Nathan a pre-emptive right to buy Coopers shares offered for sale by any shareholder. Coopers claimed in its lawsuit that Lion Nathan forfeited its pre-emptive right when Japanese brewer Kirin Brewery Co. acquired a 45% stake in Lion Nathan about six years ago.

Lion Nathan chief Rob Murray said in a statement the company "will continue to pursue all available avenues" to ensure that Coopers shareholders can consider the bid on its merits.

Shares in Lion Nathan closed up 1 cent at A$7.49. The court order was announced after the market closed.

18 November, 2005