Montana debacle: The good, the bad and the unlucky
The New Zealand press are having a field day, crying crocodile tears for the small investor after Lion Nathan's audacious takeover of Montana. Accusations and recriminations abound in the business world and the political arena, with screams of foul play resulting in the NZ premier calling for change. David Robertson reports on what some commentators are calling the new "Wild West" tactics of the New Zealand investment market.
"The New Zealand Stock Exchange has seldom seen a darker hour than that when Lion Nathan was given a head start over a rival bidder for the acquisition of Montana Group," intoned the rather-too-serious New Zealand Herald on Tuesday morning.
Will they be moaning in 12 months if the share price, has raced ahead?
The lightning strike by Australia's Lion Nathan for Montana wines on Friday has caused outrage among people who have probably not looked at the Kiwi share market anytime in the past five years.
Lion Nathan appears to have beaten Allied Domecq to the New Zealand winemaker largely thanks to a rather strange decision by the supposedly independent market surveillance panel.
The panel allowed Lion to ignore the two-day stand down period when a company signals its intent to buy another. Allied had to observe the waiting period which allowed Lion to run around scooping up large chunks of stock from institutional shareholders.
Allied had bid $4.40 a share for 100% of stock, Lion $4.65 a share for 50.1%. Not surprisingly the institutions took the higher price leaving newspaper editors to fume of behalf of all the small shareholders unable to take advantage of the deal.
Montana Marlborough Sauvignon Blanc
Both the main daily papers, the Herald and the Dominion, carried leader articles decrying the Stock Exchange for allowing small shareholders to get shafted by the big bad Lion.
"Neither body [exchange or panel] has emerged from this latest debacle with any credibility in the eyes of ordinary investors…For mums and dads with a few shares, this is just the latest kick in the teeth from a poorly-policed market," said the Dominion.
What is truly incredible in these days of spin is that the media is writing and broadcasting this stuff largely without help from Montana's PR machine.
"This shambles has confirmed New Zealand's Wild West reputation in the eyes of overseas investors already struggling to find reasons to invest in this part of the world…The contempt with which the Stock Exchange has treated Montana shareholders - not to mention the wider damage it has inflicted on New Zealand's investment reputation - confirms New Zealand needs a robust takeovers code," the Dominion continued. Even the prime minister picked up the Wild West theme when she promised new takeover rules from July in Tuesday's state of the nation speech.
But all this hot air over the Montana deal misses some obvious points.
Church Road Hawke's Bay Chardonnay
While it is undoubtedly very strange for the panel to wave its rules for Lion (although less surprising when you realise that Lion chairman Doug Myers is about as much a part of the Auckland old boys club as its possible to get) the deal is not necessarily bad for small shareholders.
They keep their share in a much stronger company. Will they be moaning in 12 months if the share price, on the back of Lion's distribution and marketing clout, has raced ahead?
The Allied deal has been painted as some sort of saviour but in reality many small shareholders would have been very unhappy with it. Allied would have swept aside resistance and effectively forced everyone to sell at its price - no matter that some shareholders may have been hanging on for long-term growth.
Also while Montana bleats about how unfair all of this is, was it fair of chairman Peter Masfen to arrange a quiet deal with Allied Domecq? It is now widely believed that Masfen set up the Allied deal - were small shareholders consulted then? No.
In fact, given that Masfen did all but roll out the red carpet for Allied it could be argued that the surveillance panel were just levelling the playing field for Lion by waving the two day rule - it is worth bearing in mind that Lion was a 28% shareholder with a long history of co-operation with Montana.
Even if Masfen had the best intentions of the small shareholder to heart he was hardly being fair to his former friends and allies at Lion.
But what is truly incredible about this whole affair is how TV has managed to make the story the lead item for the last three days when next to nothing has happened.
Only a stand up brawl between Lion chief executive Gordon Cairns and Masfen will justify the hand wringing and words of woe coming from the New Zealand media - and don't think it won't happen.
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