Lion buys up despite uncertainty

Press, 26 October 1989, Page 28

Lion buys up despite uncertainty

NZPA Wellington Lion Nathan’s shopping spree this week suggests the retail giant is not relying on its proposed deal with Bond Corp Holdings to improve its balance sheet.

Lion announced yesterday it would buy eight Farmers Trading Company stores in provincial and suburban centres for just under $9 million and run them under the banner of subsidiary Deka. This news follows the company’s announcement on Tuesday that it had bought the Australian Pepsi-Cola franchise and comes hard on the heels of unsettling publicity over Bond Corp Holdings. Bond chairman, Mr Alan Bond, said the company’s debt- was sAusts.3 billion ($NZ6.978) despite earning SSB ($6.578) through asset sales over the past year. The company last week reported Australia’s largest annual loss of $814.07M (S1071M), making its proposal to form a joint venture brewing operation with Lion uncertain.

The original proposal involved Bond selling its Australian brewing assets into 58 per cent-owned Bell Resources for $2.58 ($NZ3.268) and bidding 160 c (209 c a share for the remaining Bell shares. The former Bondowned breweries would then come under the control of a joint venture company owned equally by Lion and Bell.

But a major stumbling block in Bond’s attempt to take over Bell has been the refusal of John Spalvin’s Adelaide Steamship Company to accept the bid. The company has rejected the offer as being too low.

Lion Nathan has asked the New Zealand Government to support its bid.

However, announcing the deal to buy the Pepsi franchise, Lion chief executive, Mr Doug Myers, said he had no doubt the brewing deal would go ahead despite the fact it was still to be approved by the Foreign In-

vestment Review Board. The National Companies and Securities Commission was very positive, he said.

The deadline for the registration of the Part A takeover statement for minority shares in Bell Resources has been put back from October 18 to November 21.

Lion has been widely regarded as a strong contender for the Farmers chain since troubled owner, Chase Corp, announced it was keen to sell.

But the sale of the eight stores at Kaikohe, Dargaville, Glenfield, Pukekohe, Morrinsville, Cambridge, Wainuiomata, and Richmond still leaves Chase with 50 stores to sell.

Merchant bank, Fay Richwhite, last week revealed it was bidding for the chain and planned to relist FTC on the Stock Exchange if its offer succeeded. Fay Richwhite yesterday confirmed it was keen to buy the remaining Farmers stores and said FTC’s deal with Lion would not affect its offer. Lion has not limited its recent buying to New Zealand shores, announcing on Tuesday it had bought the Australian Pepsi-Cola franchise.

This news comes only two months after Lion got out of the local softdrink market by selling subsidiary, Oasis Industries, to Australian firm, C-C Bottlers, and the United States Coca-Cola Company for more than $225M. Oasis held the Coca-Cola franchise for all New Zealand except Wellington, the national franchise for Schweppes and specialty drink, Lemon and Paeroa. Lion’s deal to acquire the franchise is effective from next January when Cadbury Schweppes’ franchise on the softdrink expires. The agreement, still subject to Foreign Investment Review Board approval, involves Lion getting the franchise for. free in return for installing new “state of the art" plants and paying for 50 per cent of the marketing in Australia.

The first bottling factory will be built over the next six to 12 months in Sydney and will cost about S2SM. Estimated costs to Lion Nathan for the first five years of operation are between SSOM and S6OM. Mr Myers said that if Lion Nathan had not sold Oasis Industries to Australian interests in June it would not have been able to look at Pepsi.