Big Cooper's article

Discussion of Lion Nathan's failed takeover bid for the independent Cooper's Brewery and links to articles and other discussions.

Big Cooper's article

Postby Oliver » Wednesday Oct 05, 2005 11:14 am

Here's a huge article about the takover bid. It starts off about how the Cooper's legal action is going well.

You'll find the original at http://www.theaustralian.news.com.au/co ... 41,00.html

Of paricular interest is the part right at the bottom, which talks about an Adelaide private school having a big shareholding and being under pressure to sell, but at the same time wanting to buy more shares.

Full information the key to Coopers takeover vote
Bryan Frith
October 04, 2005


FEDERAL court judge Alan Goldberg yesterday appeared to be leaning towards allowing shareholders of Coopers Brewery to decide whether they want to kill off Lion Nathan's $352 million takeover bid - provided they are fully informed as to the consequences of their vote.

That suggests Goldberg is likely to allow an extraordinary meeting of Coopers shareholders, called to consider changes to the company's constitution, to proceed - provided Coopers supplies much more information than was contained in the perfunctory explanatory memorandum which accompanied the notice of meeting.

If that interpretation is correct, the crucial issues are the degree of additional information that may be required and whether Goldberg considers that the meeting can proceed on its scheduled date of October 20, or whether it needs to be deferred to a later date to give shareholders sufficient time to fully digest the ramifications of the additional information.

The meeting was requisitioned by shareholders who own more than 5 per cent of Coopers capital. They are seeking to amend the constitution, which requires the approval of 75 per cent of those who vote, to remove all references to Lion Nathan. The effect would be to remove Lion Nathan's existing pre-emptive rights in relation to sales of Coopers shares and to prevent Lion Nathan, as a competitor brewer, from owning shares in the company unless they have the consent of the Coopers directors, who have stated they don't intend to provide their consent "at this time".

That would mean Lion Nathan effectively couldn't proceed with its bid because it would be unable to acquire Coopers shares. The shareholder resolutions amount to a poison pill designed to make Coopers takeover-proof.

The directors decided not to make a recommendation as to how shareholders should vote, but those who are shareholders support the requisitionists in their attempt to prevent the Lion Nathan bid. Those directors who hold shares intend to vote in favour of the resolutions. Lion Nathan responded by issuing proceedings in the Victorian division of the Federal Court, seeking a declaration that the proposed modifications would not bind existing shareholders, unless they agreed to them in writing, because it would increase restrictions on their right to transfer shares in the company. Lion also sought an injunction against the meeting until at least 21 days after shareholders had been provided with additional material information.

Lion wants Coopers shareholders to be told that the purpose of the resolutions is to prevent shareholders from selling shares to it, that restrictions on transferability of their shares would hurt the liquidity and value of their shares, and that the prospects of selling their shares for about $260 a share "either now or in the foreseeable future" would be very substantially reduced. It also wants shareholders informed that the $260 bid price is a substantial premium (almost six times) to the buy-back price of $45.01 a share in September 2003 and to the trading price of $16.27 or less in the 3 1/2 years before the buy-back.

Lion Nathan wants to reveal the trading price of Coopers shares since September 2003, including the prices sought by sellers and the prices actually received under the pre-emptive rights mechanism and the identity of the buyers. It also wants them told of any shares bought by directors in the past five years, the prices they paid, and their intentions with respect to buying any further shares.

The proceedings got under way in the Federal Court yesterday but were adjourned by Goldberg until tomorrow. However, he made a remark to the effect that a meeting of shareholders was the "ultimate forum", provided they were voting on a properly informed basis.

The Coopers board have recommended rejection of the Lion bid, which they described as "opportunistic", but it's important to note that shareholders have as yet received no information from the directors to support that recommendation. Lion Nathan has not yet posted its bidder's statement; in fact it has not yet lodged it and is unlikely to until around October 17, three days before the scheduled meeting date. That would mean the bid couldn't be posted before October 31 and the target's statement from the Coopers board wouldn't come out until around mid-November. In those circumstances it's arguable that if shareholders are to be asked to kill off the bid - and significantly reduce the likelihood of a future takeover bid for the company - then the explanatory memorandum should provide the type of information which would be required in the target's statement.

That would include what implications rejection of the bid would have on the liquidity of Coopers shares and on the future price of the shares. It's arguable that it should also provide shareholders with an estimate of the worth of the company. It's known that Coopers put valuation expert Grant Samuel on retainer while the board considered whether it would commission an independent valuation.

If shareholders are to be asked to vote on killing off the Lion bid, it's difficult to see how they can be informed as to precisely what they would be saying no to. It will be interesting to see if Justice Goldberg comes to that conclusion.

PRINCE Alfred College, one of Adelaide's more exclusive private schools, is playing a curious game over its strategic shareholding in Coopers Brewery.

The college is in the fortunate position of owning 70,106 Coopers shares, or just over 5 per cent of the capital, which were reportedly bequeathed to it in 1990 from the estate of Wilfred F. Cooper, a former pupil. Rival brewer Lion Nathan is offering $260 a share for Coopers shares, which values Prince Alfred's stake at $18.225 million. Moreover, Lion Nathan is prepared to guarantee the college that price, as it has already done with several other shareholders. The company has written to the college seeking an urgent meeting to discuss the issue.

Adelaide's Sunday Mail claims that the college has been under siege from parents who want it to sell the shares and spend some of the proceeds on new facilities.

The newspaper reported that the school's governing board of directors were yet to decide on the fate of the shares, and were likely to await the outcome of the various court proceedings under way between Lion Nathan and Coopers.

However, according to the Sunday Mail, if the shares were to be sold, the school's preference would be to first offer them for sale to Coopers shareholders at $250 a share. Of course the constitution provides that existing shareholders get first option to acquire the shares, under their pre-emptive rights; moreover, they have the right to obtain a "fair value" from the auditor KPMG and if it was less than $250 a share, the college would be obliged to take the lower price.

What's intriguing is that the college has also put up its hand to acquire additional Coopers shares. An existing shareholder, Barry Schrapel, has lodged a transfer notice with Coopers to sell 6000 shares to Lion Nathan at $260 a share.

Coopers has found 14 shareholders prepared to buy the shares - one is prepared to acquire five shares at Schrapel's $260 a share asking price while the other 13 have all requested a "fair value" from the auditor.

Prince Alfred is seeking the largest quantity - 2000 shares, or one-third of those on offer. And it has requested a fair value from KPMG. Those parents who want the college to sell the shares would no doubt be intrigued to know why the college is prepared to buy more shares.
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Postby undercover1 » Thursday Oct 06, 2005 4:21 pm

Latest developments:
LION Nathan will release its Bidder's Statement for Coopers Brewery on Monday in a bid to stall Coopers' attempt to make itself takeover proof.
Counsel for Lion Nathan, Neil Young, QC, yesterday told Federal Court justice Alan Goldberg that Coopers' extraordinary general meeting, scheduled for October 20 with the aim of removing Lion Nathan's third-tier pre-emptive rights, should be delayed until at least November 8, when Coopers would be forced to respond with a Target's Statement.
He also told the court that Coopers' shares would be valued at $90.66 - as opposed to Lion Nathan's $260 a share offer - based on the valuation methodology used by KPMG in 2003 when applied to the Adelaide brewer's 2005 results.
Alternatively, when using the the market multiples analysts use for Lion Nathan, they would be worth $203.79. He said Lion would release its Bidder's Statement detailing its $352 million offer for Coopers by close of business on Monday.
A vote to scrap the pre-emptive rights - which puts the trans-Tasman brewer third in line to buy the shares ahead of other Coopers shareholders and AMP, which runs the Coopers superannuation fund - would in effect block Lion Nathan's bid. But he said the scheduled vote would be held before shareholders had access to the Target's Statement, which meant they would not be able to make an informed decision.
"We are not seeking to delay indefinitely this EGM," Mr Young said. "The point is it only takes a short delay for directors to arm themselves with information. They can inform shareholders at the cost of a short delay to the EGM."

Counsel for Coopers, Dick Whitington, QC, said Coopers was prepared to issue another explanatory memorandum to shareholders explaining that if they voted in favour of the resolution to remove the pre-emptive rights, the takeover would no longer be available "in its present form". Alternatively, if they rejected it, they could consider the offer. Justice Goldberg is expected to hand down his decision tomorrow at 5pm.
Salut!
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