Bega boss sends disciplined message to Warrnambool
He had no lollies in his pocket or other sweeteners to entice the shareholders of Australia's oldest listed milk processor to accept his company's bid.
Bega made its final offer to take over WCB on Thursday. It was unconditional at $2 cash plus 1.5 Bega shares, valuing the bid at a touch over $9 based on Tuesday's close.
Despite Murray Goulburn and Saputo offering $9 cash, or $505 million, Mr Irvin said he was comfortable with Bega's bid.
He said it sent a message to WCB and Bega's shareholders that the company's board was disciplined and was not "going to get dragged into an endless bidding war".
"We had in our minds the range we wanted to work in, the gearing that we wanted the company to have and the value creation that we thought could be created.
"For us, as with everything we do in our business, it was all about staying very disciplined in our approach. The bidding has been going on for quite a while now."
This was not a concession speech, but rather words aimed at invoking a steady hand and future prosperity - the essence of Mr Irvin's pitch he will make to WCB shareholders at meetings in Warrnambool, Mount Gambier and Ballarat this week.
"Bega Cheese, Tatura Milk Industries - which we recently merged with - and WCB have very common histories, very common cultures, and our ambition is to bring those businesses together to create a really strong Australian dairy company that can improve returns for both shareholders and suppliers," he said. "We still think that argument has a lot of merit.
"We will be putting our track record on the table around our capacity to buy businesses, integrate them and not only create value but also add value to the community. Build those businesses and invest in them."
This is despite WCB chief executive David Lord hinting that a merger with Bega or Murray Goulburn could lead to job losses under planned synergies.
Bega, which owns 18.3 per cent of WCB, believes it can squeeze an extra $7.5 million before tax out of Warrnambool in cost savings in the first year of ownership.
But Mr Irvin said that did not mean job cuts.
"We will keep all the operating sites, the brand, the board etc," Mr Irvin said. "Now of course at very senior executive level there would be some rationalisation. But I'm disappointed that uncertainty would be put in the mind of the general employee population and the broader community.
"Not only were we very clear but our best example is in our acquisition of Tatura Milk Industries and our purchase of Kraft's Strathmerton site.
"We haven't only created more opportunities for staff we have actually increased staff numbers and increased investment in the business. We weren't making the comments without foundation or as rhetoric. We can point to the evidence of our track record."
Frequently Asked Questions about this Article…
Bega's final offer to Warrnambool Cheese and Butter (WCB) shareholders was $2 cash plus 1.5 Bega shares, valuing the bid at just over $9 based on the closing price at the time.
Murray Goulburn and Saputo both offered $9 cash, or $505 million, for WCB. Despite this, Bega's CEO Barry Irvin expressed confidence in their bid, emphasizing the company's disciplined approach.
Barry Irvin wanted to convey that Bega's board is disciplined and not willing to engage in an endless bidding war. He emphasized the company's focus on value creation and maintaining a steady approach.
Bega plans to integrate WCB with its existing operations, aiming to create a strong Australian dairy company that improves returns for shareholders and suppliers. They intend to maintain all operating sites and brands while potentially rationalizing at the senior executive level.
Bega's CEO Barry Irvin stated that while there might be some rationalization at the senior executive level, the company does not plan to cut jobs. Instead, they aim to increase staff numbers and investment, as demonstrated in their past acquisitions.
Bega believes it can achieve an additional $7.5 million in cost savings before tax from WCB in the first year of ownership, without resorting to job cuts.
Bega has a strong track record with past acquisitions, such as Tatura Milk Industries and Kraft's Strathmerton site, where they have increased staff numbers and investment, creating more opportunities for employees.
Bega believes their merger with WCB has merit due to the common histories and cultures of the companies. They aim to create a robust Australian dairy company that benefits shareholders and suppliers, leveraging their successful integration experience.
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