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Kirin set to take lion share of big brewer -

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Kirin set to take lion share of big brewer

The World Today - Monday, 27 April , 2009 12:53:00

Reporter: Sue Lannin

PETER CAVE: Australia's second biggest beer maker looks set to be taken over by its biggest
shareholder, the Japanese brewer Kirin.

It's offered to buy out Lion Nathan, in a deal which values the company at $6.5 billion.

The deal still has some way to go - it needs to be approved by shareholders, the competition
regulator, and the Foreign Investment Review Board.

Finance reporter, Sue Lannin.

SUE LANNIN: There have been days of intense negotiations between the maker of beers like Tooheys
and XXXX, and its major shareholder, Kirin Holdings.

But now Lion Nathan shareholders have been offered $12.22 a share, a 50 per cent premium on last
week's closing price.

Chairman Geoff Ricketts says Lion Nathan will remain in Australia if the deal is given the
go-ahead.

GEOFF RICKETTS: Lion Nathan will of course remain an Australasian-based business, employing over
3,000 Australian and New Zealanders, and producing some of the region's best-loved brands with
locally-sourced ingredients.

While I note that Kirin has stated that Lion Nathan will be an integral part of Lion's... Kirin's
growth strategy in the region, and the transaction would create exciting development opportunities
for our people across an enlarged group.

It should be noted that the sole focus of the board's negotiation to this point has been on
maximising the value delivered to non-Kirin shareholders.

SUE LANNIN: Kirin has been the biggest shareholder in Lion Nathan for more than 10 years. Now it's
expanding around Asia to counter falling demand in Japan.

Last year it took over Dairy Farmers, Australia's biggest milk processor. It also owns dairy and
fruit juice producer, National Foods.

The deal means Kirin will take over the 54 per cent of Lion Nathan it doesn't already own.

Chairman Geoff Ricketts says the discussions over price were frank.

GEOFF RICKETTS: Civil, but tense (laughter).

A lot of toing and froing. I mean, you've got to remember that we've sat round the table with these
people for 11 years, so we know them. So in many ways I think that made it easy, because we could
talk to each other pretty frankly.

SUE LANNIN: It's not clear yet if the current management will stay on.

But analyst Prasad Patkar from Platypus Asset Management says he thinks the deal will be supported
by shareholders.

PRASAD PATKAR: Yeah, I believe so. Shareholders of Lion Nathan were always likely to get a bid from
Kirin as one of their exit strategies, and crystallise value in that manner.

So, I suspect it was only a matter of time, and this bid does crystallise value for shareholders
rather quickly. And it's an opportunistic bid, but it does represent good value.

SUE LANNIN: Last year, Lion Nathan offered more than $7 billion for alcohol and soft drinks maker
Coca-Cola Amatil, in a tie up that would have created the largest beverages company in Australia.

The bid was dropped earlier this year.

If there any regrets Geoff Ricketts and chief executive, Rob Murray didn't want to talk about that
today.

GEOFF RICKETTS: Well, commercially we obviously think it makes sense, because we had a bet to
(phonetic) whether our returns or not I guess depends a bit on whether it's available, or can be
negotiated, at what we think is fair value.

ROB MURRAY: I mean, it was off the agenda for Lion's. You know, you're asking us to think about a
bigger group that we, you know, we just don't.. that's just not where we've been at.

Our focus the past few days has just been on maximising this price; so that's something to worry
about another day.

SUE LANNIN: And Prasad Patkar says there are still a lot of hurdles to clear for a tie-up between
Coca-Cola Amatil and Lion Nathan to go ahead.

PRASAD PATKAR: The transaction as we understand it failed for non-value reasons. So there were
certain terms which the Coca-Cola company in the US and Kirin could not come to an agreement on.

SUE LANNIN: Kirin's takeover plans must be approved by shareholders, the competition regulator, and
the Foreign Investment Review Board.

But it strengthens the company's hand in the battle of the brewers with market leader, Foster's
Group.

PETER CAVE: And that's Prasad Patkar ending that report from Sue Lannin.