Coopers clan reject latest brewery buyback

The close-knit family descended from the 19th century founder of Coopers Brewery has largely rejected a share buyback.

The close-knit family descended from the 19th century founder of Coopers Brewery has largely rejected a share buyback. Picture: AFP

The close-knit family descended from the 19th century founder of Coopers Brewery has largely rejected a share buyback that valued the nation’s biggest Australian-owned brewer at $358m.

The deal would have showered the Coopers clan in dividends and franking credits.

With an upper-end target of buying back 2.5 per cent of Coopers Brewery’s issued capital, only 0.44 per cent was sold into the offer.

The buyback price and company valuation for Coopers Brewery compares to a $420m hostile takeover bid in 2005 by rival brewer Lion, which fought a bitter and unsuccessful public battle to grab control of the family-owned South Australian brewer. Documents obtained by The Australian show a share buyback booklet distributed last month to the 177 shareholders in South Australia’s Coopers Brewery — made up of individuals, partnerships, trusts and charitable organisations — offered $335 a share.

This share offer comprised $316.01 per share as a dividend component and only $18.99 as a capital component.

This split between dividend and capital component can have beneficial tax implications for shareholders selling their stock into the offer.

The Coopers Brewery document explained to those lucky few born into the family of brewer Thomas Cooper that if they were on a 45 per cent tax rate they would expect to pay net tax of $67.72 from the $335 per share sold into the buyback. Those on a lower tax rate could receive a net refund of $49.66 thanks to an imputation credit of $135.43 a share.

Coopers Brewery, led by a board of directors dominated by the family, including chairman Glenn Cooper, had expected to buy back between 1 per cent and 2.5 per cent of the 1.068 million shares held by its small band of shareholders, costing the company $3.58m to $8.95m.

However, the Coopers clan — of which 90 per cent are directly descended from the founder — were mostly happy to sit on their shares, with only 4640 handed back into the offer, representing about 0.44 per cent of the entire shares on offer.

It was the tenth share buyback since Lion’s takeover bid in 2005.

The brewer conducts a buyback every few years to help liquidity and allow family shareholders to sell down some or all of their holdings.

The minuscule response from Coopers Brewery shareholders made this the smallest buyback since 2003.

“Because the shares had gone up so much in value as a result of the Lion hostile takeover bid, it ­really made some people think,” Coopers Brewery chief executive Tim Cooper said.

“As our advisers said, this becomes a life-changing event for some people as they have a few thousand shares — they can sell them and become millionaires overnight.

“In the first couple of buybacks after the Lion battle we bought back 177,000 shares.”

The brewer has an antiquated corporate constitution and shareholder base — partly reflective of its 19th century origins — which ultimately kneecapped the Lion takeover bid 15 years ago. Coopers’ share capital base is split among the descendants of ­founder Thomas Cooper’s two wives.

There are 15,553 “class A” shares that are owned by family members who trace their lineage to Mr Cooper’s first wife, Anne, with 15,953 “class B” shares owned by children born to his second wife, Sarah.

A larger pool of more than 960,000 “class C” shares can be bought and sold by both branches of the Cooper family.

Last month, Coopers Brewery reported profit before tax for fiscal 2020 of $34.3m, which was in line with the profit posted in 2018, but a strong recovery from the $23.1m recorded in the 2019 financial year.

The brewery has about 5 per cent market share of the nation’s brewing sector.