Warrnambool Cheese & Butter Factory (WCB), the Australian dairy group, has secured funding for its planned acquisition of a 50% stake in a venture with bigger peer National Foods.
The venture, Australian Cheese Company (ACC), will run the cheese business of Dairy Farmers, which National Foods bought last year. ACC will own brands including Cracker Barrel and Mil Lel.
WCB said today (31 March) that it arranged funding of A$50.6m (US$35m) through an equity raising. The issue comprises a two for three renounceable pro-rata offer to raise the cash through 26.6m shares at a price of A$1.90.
The offer price is at a discount of around 29% to WCB’s shares for the five days before the announcement and a discount of around 18% to the theoretical ex-offer price.
WCB said shareholders participating in the offer can also apply for extra shares under a shortfall facility.
The venture will own and operate Dairy Farmers’ cheese manufacturing, cutting and wrapping facilities at Allansford, Jervois and Simpson.
WCB will supply the venture with a majority of the bulk cheese it needs and milk based on similar agreements with Dairy Farmers.
National Foods will take charge of sales, marketing, distribution and also supply milk to the venture.