Australian dairy processor Bega Cheese has launched a takeover bid for rival Warrnambool Cheese and Butter Factory, in which it already holds an 18% stake.
Bega has made a cash-and-share offer valuing WCB at A$319m (US$224.4m) and insisted the enlarged business would benefit from a “globally relevant” scale.
The company first invested in WCB in 2010 when it snapped up a 15% stake in the business. Since then, industry watchers have speculated Bega could make a bid to buy the rest of WCB.
The bid on the table would see WCB investors receive 1.2 Bega shares plus A$2 a share for their stake. Bega said the offer equated to a 30% premium to the volume average weighted price of WCB shares over the past month.
Bega executive chairman Barry Irvin said the “benefits for each company’s shareholders, many of whom are farmer-supplier shareholders, are highly attractive”. and pointed to annual synergies of A$7.5m.
Irvin said: “Customers, dairy farmer suppliers and employees will also benefit from being associated with a larger, more diversified organisation, an enhanced market position and a scale that is globally relevant.”
He added: “WCB shareholders are being offered shares in Bega which has a record of strong financial performance and value creation. While the potential synergies are substantial, we intend to deliver them while preserving WCB’s identity and brands.”