Bega Cheese has insisted its sweetened bid for Warrnambool Cheese and Butter Factory is its “final offer” in the three-way battle for its fellow Australian dairy processor.
A day after rival bidder Murray Goulburn upped its bid for WCB, Bega Cheese announced a revised offer for the business, which has also attracted interest from Canadian dairy giant Saputo.
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Bega Cheese, which kicked off the bidding war for WCB in September with a cash-and-stock offer, has altered the stock component of the bid.
The company is offering WCB investors A$2 in cash and 1.5 shares in Bega Cheese. Its earlier bid comprised the same cash amount but 1.2 shares.
Bega Cheese said the new bid valued WCB at A$8.871 a share – still lower than the A$9-a-share offer tabled by Murray Goulburn yesterday.
The company declared its offer “unconditional” and said rival offers from Murray Goulburn and Saputo “remain subject to conditions”.
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By GlobalDataIn a statement, Bega Cheese executive chairman Barry Irvin said the company had “demonstrated consistent financial performance and shareholder returns”.
Irvin insisted Bega Cheese’s takeover of WCB would “keep profits and benefits from the combined group in Australia and share in the synergies and upside”.
He added: “Bega Cheese intends to preserve the Warrnambool Cheese & Butter name, operating sites and brands and has no intention to close the Warrnambool Cheese & Butter head office or the Allansford or Mil Lel sites. Bega Cheese has a proven history of growing the workforces of, and investing in, the companies it acquires.”
WCB’s directors plan to meet to consider the revised bids from Bega Cheese and Murray Goulburn.
In a statement responding to Bega Cheese’s new offer, the company said its directors could not yet issue a formal response to the bid – but set about questioning it.
“The implied value of the final Bega offer is A$8.68 per share based on the A$4.45 closing price of Bega shares as at 14 November,” WCB said. “WCB’s directors consider that the current market price of Bega shares is not an appropriate reference point for measuring the implied value of the final Bega offer. This is because … Bega’s share price is being affected by a number of external factors with the result that [the] directors do not believe the current Bega share price is reflective of Bega’s current underlying or intrinsic value.”
WCB said a report from KPMG issued last month “assessed the underlying market value of a Bega share as between A$3.14 to A$3.40”.
The company also claimed there had since been public speculation Bega “may itself become a takeover target”. Two weeks ago, New Zealand dairy giant Fonterra snapped up 6% of Bega Cheese.
WCB said Bega Cheese’s share price had jumped 41% since it tabled its first takeover bid in September. WCB insisted the the recent increase in Bega Cheese’s share price is in part due to the fact it is a shareholder in the company. Bega Cheese owns 18.4% of WCB. Murray Goulburn, meanwhile, also holds an 18% stake.
“The value of Bega shares in uncertain, subject to market volatility and there is no guarantee the price of Bega shares will continue to trade at current levels,” WCB said.
WCB added Bega Cheese’s offer was less than the A$9-a-share cash offer from Murray Goulburn and “less certain in relation to value” than Saputo’s A$8-a-share bid.
“The WCB board urges WCB shareholders to be cautious in relation to the final Bega offer,” WCB chairman Terry Richardson said.
“WCB shareholders who accept the … offer will not be able to sell those shares into a competing offer for cash or sell those shares on the ASX.”
There are conditions attached to the Murray Goulburn, including no objection from the Australian Competition and Consumer Commission or a granting of authorisation from the country’s Competition Tribunal. Two weeks ago, the chairman of the ACCC reportedly said a Murray Goulburn takeover of WCB could be a “concern”. Bega Cheese has received the ACCC’s backing for its bid.
Murray Goulburn must also secure the backing of a majority of WCB’s shareholders by the close of its revised offer.
Saputo’s offer also depends on the support of investors holding over half of WCB. On Tuesday, the Canadian group received government backing for its pursuit of WCB through the approval of Australia’s Foreign Investment Review Board.
