Bega may enjoy a one-horse race

Bega's bid for Warrnambool may go unchallenged by rival suitors, leaving the target little room to manoeuvre.

A clever defence play could be a stretch for takeover target Warrnambool Cheese & Butter Factory, with no whispers of any white knights to step in and challenge suitor Bega.

Local dealmakers say the chance of a counter bid lobbing in from offshore are slim, with no potential buyers approaching major shareholder Bega, which holds 18 per cent of the registry. 

A rejection by Warrnambool of the $320 million cash and scrip offer would be “extraordinary”, insiders say. Rather, Warrnambool is expected to attempt to negotiate a bigger cash component for the deal - which is $2 cash plus 1.2 bega shares for every one of the target's shares. 

The target can counter with an argument that Bega's estimate of $7.5 million in synergies is very light on. It has described the deal as opportunistic, in that it doesn't reflect a lift in earnings expected in FY14, with a handful of major investments due to come online over the next six months. 

The as-yet-undelivered value of projects underway could well have driven the timing of Bega's bid, led by chair Barry Irvin who quit the Warrnambool board in March.

Some analysts argue that Bega's scrip price is overvalued, given it's rise of more than 50 per cent in the past six months. 

Warrnambool is also a steadfastly parochial and independent company so it could well try to push Bega to retain the Warrnambool brand and base and secure senior executive spots on the new management team.

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