Bega now in play as diary battle heats up
New Zealand’s Fonterra became the latest group to enter the field on Thursday, with the dairy giant snapping up a 6 per cent stake in Bega Cheese after the market closed.
The play, worth $75 million, brings the fight over assets full circle, with Bega responsible for the opening salvo in a bidding war that escalated over Warrnambool Cheese & Butter, a dairy processor on Victoria’s western coast.
Warrnambool remains in play, but must compete for attention on a global stage with its NSW counterpart, Bega, a speculated target itself.
Canadian dairy major Saputo is currently the highest bidder for Warrnambool, with a cash offer of $8 per share. That offer was complicated this week when Japanese brewer and dairy company Kirin bought a 10 per cent stake in the Victorian company through its Lion subsidiary.
PAC Partners agribusiness analyst Paul Jensz said Saputo could be eyeing Bega as an alternative foothold in the Australian milk export market.
‘‘You’d think that a group like Saputo would be looking at their plan B, C and D now if Warrnambool doesn’t come to pass,’’ Mr Jensz said. ‘‘At least half of Bega is quite similar to Warrnambool’s export business, so that would be an alternative.’’
An adviser for Bega, David Williams, of Kidder Williams, played down the advance by Fonterra.
‘‘There’s a lot of interest in Bega. Is that speculation of a takeover? Maybe,’’ Mr Williams said. ‘‘Do people think we’re a good investment if we take over Warrnambool? I think so.’’ He said Fonterra had boosted the company’s confidence in acquiring Warrnambool. ‘‘It gives us more value for a takeover,’’ he said.
Shares in Bega shot up 9.5 per cent on Friday, to close at $4.83. Any attempt at a takeover would require the bidder to change Bega’s constitution which limits shareholders to a 10 per cent stake.
Mr Jensz said Fonterra’s stake gave Bega more firepower to increase its bid on Warrnambool, worth $7.74 per Warrnambool share. Murray Goulburn has offered $7.50 per share in cash.
‘‘Fonterra have effectively said they want to align themselves with Bega – not Warrnambool – in a domestic expansion plan,’’ Mr Jensz said. Shares in Warrnambool fell 3¢ to close at $8.27 on Friday.
Bega said it would hold a board meeting next week to discuss its next move.
Late on Thursday Fonterra picked up 9.3 million shares for $4.95 per share for a total cost of $46 million.
RBS Morgan analyst Belinda Moore said Fonterra could have several motives for the buy-in, from protecting a commercial business relationship to having a seat at the table in industry consolidation discussions.
Frequently Asked Questions about this Article…
Bega Cheese has become a potential takeover target due to its strategic position in the Australian dairy market and its involvement in the bidding war for Warrnambool Cheese & Butter. The interest from major players like Fonterra and Saputo highlights its value in the industry.
Bega Cheese is currently a potential takeover target in the heated battle over Australia's dairy assets. The company has attracted interest from major players, including New Zealand's Fonterra, which recently acquired a 6% stake in Bega.
Fonterra recently acquired a 6% stake in Bega Cheese, indicating its interest in aligning with Bega for domestic expansion. This move adds complexity to the ongoing battle for control over Australian dairy assets.
Fonterra's acquisition of a 6% stake in Bega Cheese is part of its strategy to align with Bega for domestic expansion. This move also positions Fonterra to have a say in industry consolidation discussions.
Following Fonterra's acquisition of a stake in Bega Cheese, the company's share price increased by 9.5%, closing at $4.83. This reflects investor confidence in Bega's potential in the ongoing dairy industry battle.
Following Fonterra's investment, shares in Bega Cheese rose by 9.5% to close at $4.83, indicating a positive market reaction to the news.
Saputo is currently the highest bidder for Warrnambool Cheese & Butter, with an $8 per share offer. Their involvement underscores the competitive nature of the dairy industry and their interest in expanding their foothold in the Australian market.
If Bega Cheese successfully takes over Warrnambool Cheese & Butter, it could enhance its position in the Australian milk export market. This potential acquisition has increased interest in Bega as a valuable investment.
Kirin's acquisition of a 10% stake in Warrnambool through its Lion subsidiary adds another layer of complexity to the takeover battle, potentially influencing the dynamics and outcomes of the bidding war.
The major players in the battle for Warrnambool Cheese & Butter include Canadian dairy giant Saputo, which is currently the highest bidder, and Japanese company Kirin, which recently acquired a 10% stake through its Lion subsidiary.
Fonterra's investment in Bega Cheese could be driven by several motives, including protecting a commercial business relationship and securing a position in industry consolidation discussions.
Any takeover attempt of Bega Cheese would require changing its constitution, which currently limits shareholders to a 10% stake. This presents a significant challenge for potential bidders.
Any takeover attempt of Bega Cheese would require changing its constitution, which currently limits shareholders to a 10% stake. This presents a significant hurdle for potential bidders.
Saputo's interest in Bega Cheese suggests it is considering alternative strategies in the Australian milk export market, especially if its bid for Warrnambool Cheese & Butter does not succeed.
Bega Cheese plans to hold a board meeting to discuss its next move in the industry battle, particularly in light of Fonterra's recent stake acquisition and the ongoing bidding war for Warrnambool.
Bega Cheese plans to hold a board meeting to discuss its next move in the competitive dairy market, following the recent developments and interest from major industry players.
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