Bega Cheese to press on with battle for control of WCB
Shareholders approved the lifting of a 10 per cent shareholder cap at Bega Cheese's annual meeting on Tuesday. The removal of the cap for would allow investors who hold WCB stocks to be issued with shares beyond the present limit.
The constitutional change, which would be limited to takeovers or similar arrangements, signalled the NSW producer's continued push to merge with WCB, a western Victorian business.
WCB has seen its shares rise by almost 80 per cent after Bega and two other companies - Canadian dairy giant Saputo and the Murray Goulburn Co-operative - joined the bidding war.
The share price rise meant Bega Cheese's share and cash bid valued WCB at $385 million as of Monday, just below Saputo's $391 million, Bega Cheese chairman Barry Irvin said. WCB shares fell to $8.10 on Tuesday, just below the record closing share price of $8.11 the day before. Bega Cheese shares closed down 1.96 per cent to $4.
"The Australian dairy industry needs to consolidate and needs to be in Australian hands," Mr Irvin told shareholders. "Bega's offer continues in our mind to be a compelling one ...
"We believe the common cultures should see these businesses come together."
Mr Irvin said Bega Cheese would retain WCB's brand name and operations, with the merger producing $7.5 million in savings.
The offer would lead to a combined market capitalisation of about $845 million, with revenues of more than $1.5 billion.
Mr Irvin said Bega Cheese reserved the right to revise its WCB offer, which was made on September 12 and which is open until November 28.
PAC Partners agribusiness analyst Paul Jensz said Bega Cheese remained "pretty well positioned" for a successful merger with WCB.
"They are probably the cleanest opportunity out there from an [ACCC] approval point of view. And they've left their powder dry a little bit on the price and if they need to lift the price, they'll consider it," Mr Jensz said.
Frequently Asked Questions about this Article…
Bega Cheese is actively pursuing a takeover of Warrnambool Cheese and Butter (WCB), with shareholders approving the removal of a 10% shareholder cap to facilitate the merger. The bid is part of a competitive bidding war involving other companies like Saputo and Murray Goulburn Co-operative.
Bega Cheese shareholders approved the removal of the 10% shareholder cap to allow for a smoother takeover process of Warrnambool Cheese and Butter. This change enables investors holding WCB stocks to receive shares beyond the previous limit, supporting the merger efforts.
The share price of Warrnambool Cheese and Butter has risen by almost 80% due to the competitive bidding war involving Bega Cheese, Saputo, and Murray Goulburn Co-operative. This increase reflects the high interest and value placed on WCB by these companies.
As of the latest update, Bega Cheese's share and cash bid values Warrnambool Cheese and Butter at $385 million, slightly below Saputo's offer of $391 million.
The merger between Bega Cheese and Warrnambool Cheese and Butter is expected to produce $7.5 million in savings and lead to a combined market capitalization of about $845 million, with revenues exceeding $1.5 billion. Bega Cheese plans to retain WCB's brand name and operations, aiming for a seamless integration.
Bega Cheese has reserved the right to revise its offer for Warrnambool Cheese and Butter, which remains open until November 28. This flexibility allows Bega to adjust its bid in response to market conditions and competitive offers.
According to PAC Partners agribusiness analyst Paul Jensz, Bega Cheese is well-positioned for a successful merger with WCB from an ACCC approval standpoint. The company is seen as a clean opportunity, with room to adjust its offer if necessary.
Bega Cheese's chairman, Barry Irvin, emphasized the need for consolidation within the Australian dairy industry to ensure it remains in Australian hands. The merger with Warrnambool Cheese and Butter is seen as a strategic move to strengthen the industry domestically.
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