Pub operator spurns Woolworths bid
SYDNEY, Australia (CNN) -- Pub and bottleshop operator Australian Leisure & Hospitality Group has rejected as "opportunistic and grossly inadequate" a Aust. $1 billion ($700 million) takeover bid from retailer Woolworths.
ALH said Monday the hostile bid, launched late last week by Woolworths and Victorian pub owner Bruce Mathieson at a price of A$2.75 a share, significantly undervalued the company.
ALH shares closed Friday at A$3.04 and are trading at A$3.03 near midday Monday.
Woolworths and Mathieson between them hold almost 16 percent of ALH, which was spun off from the giant Foster's beer and wine group earlier this year at A$2.50 a share.
Foster's still holds a 10 percent stake in ALH, but is unable to sell any part of that stake until November 5 unless the ALH board recommends a takeover bid.
Woolworths' bid for ALH is designed to shore up its position in the highly competitive retail market, where it is battling long-time rival Coles Myer and the German discount supermarket chain Aldi.
Coles Myer attacked a highly profitable part of the Woolworths operation last year when it moved into the retail petrol market, offering discounts to shoppers that matched Woolworths' own long-standing discount offer.
As part of its fightback, Woolworths hopes to consolidate its grip on the retail liquor market by picking up ALH's 133 pubs and 260 retail liquor outlets.
But the competition watchdog, the Australian Competition and Consumer Commission (ACCC), said at the weekend it would need to examine various issues, including the impact on suppliers, before it approved any bid by Woolworths.
Woolworths Chief Executive Roger Corbett has rejected criticism the A$2.75 bid price is too low, saying it was almost 25 percent above the trading price before Bruandwo -- the bid vehicle being used by Woolworths and Mathieson -- bought its 15.8 percent stake.
But ALH Chairman Allan McDonald said Monday the board had reviewed the proposed offer and unanimously agreed it was opportunistic, grossly inadequate and significantly undervalued ALH.
McDonald said the board intended to unanimously recommend to shareholders that they reject the offer.
