Japanese beer-maker Kirin Holdings already owns 46.13% of the transtasman brewer, and it wants to buy the remaining stock.
Lion Nathan is Australia's second-largest brewer.
Its beer brands include XXXX, Tooheys, Boags, James Squire, Heineken, Becks and Hahn.
In New Zealand, it brews, markets, sells and distributes a range of alcoholic beverages, including beer from three major breweries as well as two smaller breweries.
Its major brands include Speight's, Waikato Draught, Corona, Becks and Smirnoffs.
Kirin also owns Australian food, juice and dairy products group National Foods.
Lion Nathan yesterday requested a trading halt in its shares while it holds confidential talks with Kirin.
The talks follow Kirin's approach after the close of trade on Wednesday with an indicative, non-binding, conditional and confidential proposal to buy Lion Nathan's remaining shares.
Lion Nathan said it would establish an independent board committee to clarify the details of the Kirin offer on behalf of the remaining shareholders.
The trading halt will remain in place until an announcement is made, or until Monday, April 27.
ABN Amro Craigs broker Peter McIntyre the price Kirin would have to offer to secure the rest of the shares would need to be at a substantial premium to Wednesday's closing price of $A8.31 ($NZ10.53).
He suggested $A12.50 would be the minimum needed to secure the deal.
"Lion Nathan is a defensive company. If it goes, there is not many companies of that size in which to invest. Food and alcohol are defensive stocks in a recession and that still holds true."
Lion Nathan was widely held by institutions and they were likely to be reluctant seller "at this stage".
Lion was a popular company with investors, and for the past two years it had been part of core portfolios.
Most brokers would have been supportive of the stock, Mr McIntyre said.
"It's good to have corporate activity again, but Lion Nathan has been a stalwart of the New Zealand Exchange for years.
To have it delisted, or moved to Japan, will mean another one of our big players will have gone."
Research director at The Intelligent Investor, Greg Hoffman, said many Japanese companies were cashed up as the yen had strengthened over the past nine months or so.
"That makes it more attractive for them to buy [assets]."
When Lion Nathan moved late last year to acquire soft drinks maker Coca-Cola Amatil Ltd for $A7.6 billion - which was ultimately unsuccessful - Kirin wanted to increase its stake in Lion Nathan.
"But that deal fell over, and they weren't able to increase their stake. This is obviously plan B," he said.
Lion Nathan had intended to place new shares with Kirin to raise funds for the cash component of its cash-and-scrip offer for Coca-Cola Amatil.
In February, Lion Nathan reaffirmed its guidance for fiscal 2009 and said the performance of its core beer business was "very encouraging" in the first quarter.
But its much smaller wine operations were being adversely affected by the economic downturn.
Lion Nathan had said it remained on track for a step-up in earnings in fiscal 2009 and reaffirmed its operating net profit guidance of $A300 million to $A315 million.
Mr McIntyre said Fosters was the likely winner of the takeover play.
Fosters had a market capitalisation of $A9.9 billion compared with Lion's $4.4 billion.
