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Published:  23 July, 2008

by Bob Campbell MW

Allied Domecq has emerged the victor after a six-month struggle with Lion Nathan to buy New Zealand's largest winery, Montana. Montana directors and staff must have breathed a collective sigh of relief when they heard the outcome. They are now part of the world's second-largest drinks empire, and now have greatly improved access to global markets. Montana's directors had supported Allied throughout the lengthy battle for ownership, and had openly opposed the Lion Nathan bid. Allied has agreed to pay Lion Nathan NZ$4.80 a share for its 43% stake, a price that some believe may be too high. Lion Nathan chief executive Gordon Cairns was reported to have said: "In order to acquire the company we would've had to pay a weighted average price of NZ$4.16. There's no way we could deliver value to our shareholders at that price: the business simply isn't worth it." Last month, Montana reported a 43% drop in profits for the year to 30 June. Meanwhile, the Montana directors are recommending that shareholders accept the Allied offer of NZ$4.80, describing it as a "full price". Lion Nathan's stock price gained 30 cents after the announcement. The company earned a healthy NZ$127million profit from its sale of Montana shares. Cairns also said that Lion has identified "a number" of possible wine acquisitions in Australia. Winners and losers? Allied appears to be ahead on points, although the final bell won't sound for at least another year or two.