Who owns Montana has turned into one of the year's most intriguing battles so far. Allied has been drumming up support, but Lion Nathan is quietly confident and has even begun stalking new prey. Dave Robertson reports.

Australia's Lion Nathan may be struggling to keep control of its first wine acquisition, Montana, but the brewer shows every sign of stepping up its attempts to make roads into the wine market.

Lion remains quietly confident that it will be allowed to keep its 51% holding in Montana

Sources close to the company have confirmed to just-drinks.com that Lion has held talks with a number of Australian wine makers as the beer giant looks to match its rival Fosters as a beer-wine conglomerate.

But there is uncertainty over how far Lion has progressed with its talks. One report from a senior executive suggested that a deal was imminent but others have hinted that the premium being placed on wine companies has made Lion hold back from opening its wallet.

Brands from Lion Nathan

"We have been looking at a range of options in Australia for some time," said an insider. "We are actively looking but one problem is that wine assets are very expensive and we have to make this work for shareholders."

While Lion Nathan, which makes Steinlager, Tooheys and Castlemaine XXXX, is looking to expand its wine portfolio it is also having to fight to hold onto the brands its already has.

The bitter battle for control of New Zealand's largest wine company, Montana, took a further twist last week with the stock exchange inquiry into Lion Nathan's acquisition being delayed until next month.

Lion stole control of Montana from under Allied Domecq's nose in February but an inquiry has been established to determine if the exchange's rules were broken. If they were Lion may have to forfeit control of Montana.

Lion Nathan has kept an unusually low profile ever since the NZ stock exchange announced on February 27 that a three-man committee would hear evidence on the deal.

In contrast Allied Domecq has had a public relations guru in Auckland for the past month stirring up support for its side but Lion has largely kept itself out of the wrangle leaving its fight to the lawyers.

Montana Marlborough Sauvignon Blanc

The key appears to be whether brokers CS First Boston approached institutions to buy shares on Lion's behalf on Thursday February 8th when it should have waited till the Friday.

But although the Montana/Allied side suggest the rules are clear-cut even the stock exchange is unwilling to interpret its rules - the fact is this is a battle, like the US Presidential election, that only the lawyers can win.

The delay has been caused by wrangles over whether tapes of interviews with clients can be handed over to the inquiry. It now appears that the tapes will be made available and the hearing has been rescheduled for May 21st.

Lion remains quietly confident that it will be allowed to keep its 51% holding in Montana - as evidenced by its lack of concern for public attitudes towards it - and this delay to the hearing does nothing to weaken its position.

Meanwhile, the vultures are circling. In the last two weeks brokers report that 2.5 million Montana shares have been shifted at about $NZ4.15 each as minor shareholders and institutions hedge against an inquiry ruling against Lion which would open the door to Allied's $NZ4.40 offer.