Lion Nathan drops bid for drinks group Independent Liquor

Investors must have been pleased that shortly before closing time Lion Nathan pulled away from an escalating price war, with a price tag of over AUD 1 billion for the company founded in 1987 by the late Michael Erceg, who died in a plane crash in November 2005. A sale of Independent Liquor has been pending since mid-2006.

It has since been announced that Independent Liquor has been sold to a consortium of private equity firms Pacific Equity Partners and CCMP for an undisclosed sum. The deal, which is conditional on the purchasers obtaining approval from the Overseas Investment Office in New Zealand, and Australia’s Foreign Investment Review Board regime, makes the buy-out firms the biggest pre-mixed spirits maker in New Zealand, and number two in Australia behind Diageo.

The consortium beat off brewers such as Lion Nathan and DB Group owner, Asia Pacific Breweries controlled by Heineken, who exited from the auction because they considered the price too high.

Lion Nathan reportedly said it could not justify lifting its offer from AUD 1.15 billion. According to market observers, Lion Nathan has enough problems on its plate - ranging from intense competition in the Australian premium beer segment as well as in the New Zealand beer market to over-production in the Australian wine industry. It would have been risky integrating into its existing multi-stream business a specialist company that makes Haagen beer and imports beers including Carlsberg, Tuborg and Grolsch, but whose major earners are RTDs (ready-to-drink beverages) such as Vodka Cruiser, Woodstock Bourbon, KGB Vodka with Lemon as well as Vodka Mudshake for the ‘yuf’ market.