New Zealand brewer Lion Nathan has snatched a 20 per cent share in the country's largest wine producer from under the noses of its Australian rival, Fosters.

Lion Nathan this week bought a 19.9 per cent share of Montana Wines, in a lightning raid that caught industry analysts by surprise.

It had been widely reported that the Australian giant was interested in buying a stake of the successful wine company, although rumours of a takeover were denied by both sides.

After the Lion Nathan buy-in, both Fosters and Montana confirmed that takeover talks had taken place, but refused to say why no deal had gone ahead. It is thought that the price was the sticking point.
Meanwhile, Lion has said it was pleased with the price after paying 230 cents (75 pence) per share, although Montana Group chairman Peter Masfen claimed they were undervalued. The price values the company at around 160 million pounds.

Lion chief executive, Gordon Cairns, said the purchase was "consistent with our stated vision of a broader involvement in the New Zealand liquor market".

It is thought that the surprise move was an effort to prevent Fosters tapping into Montana's distribution network. Lion, New Zealand's largest brewer, said it was too early to say whether it would be seeking a larger share or complete takeover.

Although Fosters has indicated that it will not challenge for control of Montana, potential buyers could still gain 50 per cent of the company, and with it boardroom control. Four shareholders hold around half the company's shares between them.

On the day of the sale, Mr Masfen issued an improved profit forecast for the year to June 2000, predicting net profits of 15 million pounds - almost double the previous year's total.

Montana is also reaping the rewards of its continuing expansion, reporting an increased harvest in a year when growers were affected by adverse weather conditions.

The company, which dominates the New Zealand market and exports more than half its wine to the UK, reported a nine per cent increase in tonnage for its 2000 vintage. The increased volume was largely due to the development of new vineyards over recent years, which are now coming into crop.

Montana expects this growth to continue over the next three vintages as further new plantings mature. It is investing 30 million pounds in land and development in a bid to increase its total harvest by 130 per cent from 2004.

Peter Hubscher, Montana's managing director, said: "The quality of all the grapes harvested was excellent and augurs well for Montana's ability to continue repositioning itself as a major international provider of quality grapes."

Montana currently produces around 40 per cent of New Zealand's wine sales and exports. Fifty-five per cent is exported to the UK, while the US market continues to grow and sales to Australia are also increasing.

The company first planted in the Marlborough area in 1973 and has been harvesting grapes in New Zealand since the mid 1970s.

Clare Blackburn, Whangarei, New Zealand