Allied Domecq's battle to win control of the Australian vintner Peter Lehmann Wines took another twist yesterday as its independent directors backed a cheaper offer from Switzerland's Hess Group.
Richard England, Peter Lehmann Wines' chairman, has written to shareholders, urging them to accept Hess Group's offer but to wait until closer to the 24 October deadline before doing so.
Allied's increased offer of A$4.00 a share, which values the company at about A$149m (£61m), trumps Hess Group's offer of A$3.85. The Allied bid is, however, conditional on winning the backing of at least 51 per cent of shareholders while Hess Group's is unconditional.
That, Mr England said, had been a major factor in recommending the Hess Group offer. "The Hess offer is free of all conditions and so offers certainty of value," he pointed out.
"While the Allied offer is at a 3.9 per cent premium to the Hess offer, it has a number of conditions attached to it and it is not clear whether these conditions will be satisfied or waived," he said.
The Hess Group offer also has the support of the company's founder - 73-year-old Peter Lehmann, who is no longer a company director although he has a 10.5 per cent stake.
He is said to oppose Allied's offer mainly on the grounds that he believes major conglomerates do not make the best owners of niche companies.
His opinion could well hold sway since only four per cent of the company's shareholders are institutional investors while a large number of private investors are said to be fiercely loyal to Mr Lehmann.
A spokesperson for Allied Domecq cited research from Goldman Sachs which showed that in 25 out of 27 similar cases the company offering the higher amount had succeeded.
Peter Lehmann Wines also warned yesterday that its financial performance would be hurt by the costs associated with the takeover battle.Reuse content