The ACCC will tomorrow effectively determine the outcome of Lion Nathan’s aggressive $350 million takeover offer for the smaller South Australian family owned brewery Coopers.
The ACCC is expected to reveal the basis on which it will be examining the bid: a national beer market approach, or a regional or state based one. It may also consider the segmentation of the beer market, and the fact that all the growth in recent years has been at the premium end, where Coopers operates, which is being attacked by Fosters with its Crown Lager brand and Lion Nathan with its Hahn, Becks and Heineken brands.
A well-sourced story in the Fairfax press today laid out most of the Coopers’ arguments, with perhaps the most important point about the Lion Nathan bid being mentioned, but not given really big play.
In its attempt to halt Lion Nathan’s bid, Coopers is believed to have told the ACCC last month that the acquisition would reduce competition.
Get Crikey FREE to your inbox every weekday morning with the Crikey Worm.
It is understood that Coopers argued that the acquisition would give Lion Nathan close to 50 per cent of national beer sales and about 35 per cent of the premium segment.
Coopers is also believed to have told the ACCC that allowing Lion Nathan to buy even one share in Coopers would give the trans-Tasman brewer of Tooheys, Hahn and XXXX first-tier pre-emptive rights, effectively putting it first in line to buy more shares when they came on the market, without having to go back to the ACCC.
Coopers argued that the acquisition would mean Lion Nathan and its competitor CUB would distribute close to 100 per cent of beer in Australia.
And that’s what this bid is all about – Lion Nathan is attempting to take Coopers out of the equation and protect the cosy Australian duopoly it sahres with Foster’s.
According to a well-placed Lion Nathan source, all the company wants is a foothold on enough Coopers shares to take the company out of play – 10-15% would be enough. Lion Nathan had some vague third right options on a shareholding dating back to the 90s, but they were knocked out in a court hearing in the early rounds of the bid. Lion is appealing that decision in the hope its vague rights will be restored.
Both Lion Nathan and Foster’s know that if Coopers is free, a major foreign brewer like SAB Miller or Inbev (the old Interbrew giant from Europe) could use their deeper pockets to swoop and start making life very difficult and unprofitable for the duopoly. That’s why Lion Nathan joint-ventured with Heineken, its major competitor in New Zealand, to make and sell a well-known world brand in Australia: simply to keep Heineken away from Coopers and gaining a foothold to attack the duopoly.
Don’t believe all the hype about the bid. Lion Nathan only has one objective – a little stake. It’s all up to the ACCC.