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McGuigan Simeon denies takeover rumours

Published:  23 July, 2008

Australian winery McGuigan Simeon has denied takeover rumours, adding that it cannot explain why its share price has surged by more than 40% in the past two weeks.

Shares in the company, which is the second-largest listed winemaker in Australia, have risen by A$0.82 (41%) since the middle of September, amid speculation that a US wine group may be about to make an offer, believed to be in the region of A$300 million. The rise triggered an enquiry from the Australian Stock Exchange.

McGuigan's chief financial officer Michael Noack told the Sydney Morning Herald newspaper: We've got no idea what's going on.'

Robin Copestick, MD of Copestick Murray Wine Solutions, told Harpers that under Australian law stakeholders in a business can remain anonymous until they attain an 18% share. He added: There has been a lot of activity on the shares over the past week or so, but whoever's buying them is anonymous at the moment. It could just be those institutions like pension funds looking at a share price below A$2, and there has been a lot of activity on the Australian Stock Exchange in the past few weeks.

Also, during the past few years, when there's been deflationary pressure, McGuigan has always traded profitably. And right now, business is great and we're trading as usual.'

Two US companies have been touted as potential buyers: E&J Gallo and The Wine Group. Gallo, which is based in Modesto, California, is the US distributor for McGuigan's Black Swan range, and holds a 2.45% stake in the company, while The Wine Group, which is based in San Francisco, recently bought Evans & Tate's Mildura winery for A$8 million.

Melbourne-based newspaper The Age reported that McGuigan's share price has slumped from A$6.30 to A$1.90 over the past 18 months, adding that at one time, the winery was valued at A$700 million, but has slipped to A$227 million.

Stakeholders in the McGuigan Simeon business include a clutch of American fund managers, including Morgan Stanley, Schroder Asset Management and Maple-Brown Abbott.

Helen McGinn, the UK spokeswoman for McGuigan Simeon, was unavailable for comment.